Struggling with expenses? Old-school methods can still help you manage your money
UAE residents, experts talk on budgeting techniques that have evolved over the years
Dubai: When it comes to managing money, numerous techniques and styles have evolved over the years. But budgeters today often realise how old-fashioned savings strategies still prove to be just as effective as their new-age counterparts, if not somewhat better even.
“In this day and age, most shopping or purchases are put on credit cards. This makes it very easy to overspend. However, when you have a cash-centric budget, you know exactly how much you are spending – and nothing beats going old school,” said Dubai-based financial planner Mirin Raul.
“As age-old strategies that track how your money is spent often prioritises cash over credit, the reward is two-fold because when the cash is gone, it’s gone. Plus, you’ll have to think carefully when you decide to refill your cash stash,” added Raul, who last worked as a wealth advisor in the UK.
But what are some of these techniques that have consistently stood the test of time and are still being used to this day? When talking to UAE residents, here are five old-yet-gold practices that helped them save big – either in terms of time or money – when managing their routine finances.
Practice #1: Keeping track with a receipt spindle
Long-time UAE resident Fahed Abbas, who was born and brought up in Abu Dhabi, admitted how it has often become hard to budget and keep track of his finances, especially on days that turn incredibly hectic for him.
“I actually hate bookkeeping most days, and so my table used to be a mess of receipts at the end of every month. But then I started using a cheap spindle to organise my paper receipts. Every night I pull the receipts out of my wallet and stick them onto the prong, the old-fashioned way,” he said.
“At the end of the month, I pull the receipts off as one stack, flip the stack, and chronological receipts were ready to be reconciled. After checking the receipts against my bank records, I then put the receipts into a file. It takes less than 20 minutes a month to manage my receipts this way.”
I actually hate bookkeeping most days, and so my table used to be a mess of receipts at the end of every month. But then I started using a cheap spindle to organise my paper receipts
Practice #2: Budget using envelops with ‘cash stuffing’
If you find it hard to save, then the ‘envelope budgeting’ method, also known as ‘cash stuffing’, could be a great way for you to budget, recommended Raul. “By allocating cash into separate envelopes, the amount you put into each category represents your spending plan for the month.
“When the envelope is empty, you must quit spending on that category for the rest of the month. You can refill your cash envelopes when the budgeting period is over and adjust the amounts in them as needed.”
Dubai resident and corporate lawyer San Tomas, 35, said it was her grandmother who taught her how to budget using the envelope system. “I was a child and too young to open a savings account of my own. As this budget hack is so simple, even my nine-year-old can use it now, she added.
“My average monthly grocery budget is Dh500, and my fuel budget is Dh700. To cover these, I will withdraw Dh1,200 in cash from my salary and put the cash amount for each bill/budget category into their respectively named envelopes.”
Thomas added that this method prevents her from spending money out of pocket as money has already been earmarked for every bill. “Most times, all of my monthly spending money that is allocated to envelopes is zeroed out at the end of each month,” she said.
“But personally, I like to have money left over in my envelopes each month. This little incentive is another reason why the envelope system helps me save money. I have tangible evidence of my good behaviour!”
Practice #3: Separate bank accounts as per expenses
A common trend that dates back decades is the practise of having at least three separate bank accounts for various types of expenses, said Raul, who recommends having one for fixed monthly expenses, one for annual expenses (such as life insurance or vacations) and one for emergencies.
Raul also touted the perks of this method, which she calls "an add-on advantage” to the envelope system. “The nice thing about this system is that you get a chance to work out how much of your salary is already committed before the non-monthly expenses happen,” she added.
"For example, you can decide in advance how much of your salary you can devote to different key events this year. Then when it comes time to plan the event you know your budget and can adjust to fit what you can afford."
My grandmother taught me how to budget using the envelope system. I was a child and too young to open a savings account of my own. As this budget hack is so simple, even my nine-year-old can use it now
Practice #4: Bullet journal expenses for a realistic budget
While ‘bullet journaling’ is simply an organised system that helps you kick-start your to-do lists, financial planners opine that the system also helps you stay on track with financial goals and switch up your approach to keeping your personal finances in order.
“A ’bullet journal’ or a ‘spending book’ is a diet journal for your bank account. If you want to create a budget and save more money, you first have to know how you are spending most of your money, as its often impulse purchases that kill a budget,” Zubair Shakeel, a UAE-based wealth advisor.
“A spending book helps save money in two ways. First, it gives you a detailed, down to the penny, view of your spending habits. Secondly, like writing a cheque, it makes parting with your earnings that much more painful. This is very similar to how the Japanese spending method ‘kakeibo’ works.”
It’s a strategy that works as studies found that writing down allows you to retain information better and helps make your financial decisions over the month a lot clearer to you. So once you simplify your spending into categories, you’re more mindful about how you’re spending your money.
Practice #5: Going cash-only to rein in overspending habits
It’s been long considered that ‘cash is king’, which is why a lot of us still make it a point to withdraw a portion of their salary in cash to use for discretionary spending. That way, when the cash is gone, you know you've used up all your extra spending money.
“Sticking to cash helped me limit impulse spending. For example, I wanted to cut down on lunch at work and decided to allow myself Dh100 per week. I decided I can spend it all on Monday or cut back and eat a few cheaper lunches instead," said Aditya Srini, 43, a Dubai-based accountant.
Srini previously found himself in a bind due to his credit card usage. “By frequently swiping my card for purchases, I accumulated high-interest debt over time, and this hindered my ability to save. I got myself out of that vicious cycle by restricting myself to cash-only payments, at least at first.”
"Freeze half a bowl of water. Add the credit card to the bowl then top off the water and freeze. The card is suspended in ice, giving you time to think before making a big purchase, so there's no way around it,” added Shakeel. “Of course, this only works if you have not memorised the card number.”