Keeping tabs on the real world

In some fantasy world there is a city where you can save a known percentage of your salary, receive regular pay raises and you don't have to worry about which central bank has cut interest rates and how it would affect your investments.

This place isn't Dubai, not only because it is very real, but also because such worries seem to surface more and more in our daily life. These are the financial issues that go beyond your abilities to practice sound monetary discipline to how your surroundings are changing and affected by external powers.

In most cases, the immediate impact you feel regardless of the cause is a tightening of your purchasing power. Many nationals and residents in the UAE may be able to relate easily to this situation. Whether making Dh4,000 or Dh100,000 a month, maintaining the same lifestyle on a rigid income becomes harder and harder every day. And the result is usually a comprise on your lifestyle: entertainment spending, holidays trips, upgrades for your possessions are the first to go.

An Arab friend recently told me that one of the main reasons he moved into the city two years ago was to enjoy its modern flavour. "It was like relocating to Europe or the US without the restrictions of immigration or the negative sentiment against Arabs," he said.

However, he finds himself forced to carefully watch his spending, and therefore he had to cut down on nights out, fun activities and downgraded his accommodation from a one bedroom apartment to a studio in a less attractive neighbourhood. "I am even thinking of changing jobs only for the sake of making an additional couple of thousand a month," he said.

The attraction of living and working in Dubai has changed for him. "I came to Dubai for a reason. Now I am staying for a completely different one," he said, pointing to career ambition.

For him to replace one goal with another may be disappointing since it is being done under financial pressure, but it doesn't seem to be a major source of stress.

Juggling

Many others don't even have the luxury of juggling goals. If your primary goal in coming to the UAE is to make money, and you have carefully calculated your income versus spending to ensure that a surplus will be there, nothing may compensate you if this margin is swallowed. Such an extreme case may force expats who had plans to remain in the UAE for several years to return or send their families home. This is definitely a source of severe stress.

Another very difficult situation is when the downgrading force touches basic life necessities such as food, healthcare and education. This type of compromise may push people in different directions while they are trying to cope with it.

Resistance to accepting change is the most dangerous situation since it means you continue living the same lifestyle without worrying about the growing gap between your income and spending.

How? Living off credit cards or personal loans. Now you really need to make sure you're not drifting into a fantasy world, because at the end of the day when your credit card bills pile up, you won't be waving a magic wand to pay them.