Do you ever shop purely for pleasure but often end up spending beyond your means? If so, you can certainly relate to Jennifer Banton Miranda, a UAE-based Filipino expat who admitted to once being a shopaholic constantly finding herself splurging on luxury items whenever she was stressed.
“If I cannot travel, I would shop and buy luxury bags, shoes, gold sets, and other high-end things,” said Miranda, a single mother and entrepreneur running multiple businesses in Abu Dhabi. Such impulsive and needless spending has been her biggest regret when managing expenses, she said.
Miranda has been living in Abu Dhabi for 18 years now, having first worked in sales and marketing for two years before starting her own business with a partner in the field of advertising. They started an ad agency in 2005 and an event management firm in 2013.
“The advertising company was our bread and butter, but since the pandemic the company has been running very slowly. So I then opened a coffee shop and a men’s salon,” explained Miranda, when detailing how her budget ballooned with routine expenses consistently rising over time.
From managing routine costs to untethered splurges
For several years since, managing expenses has been a routine affair for her; after receiving income from her businesses, she would pay rent, send money to her family back home, pay insurance, and spend on daily operations and other personal wants and needs.
“I would spend 20 per cent on rent, 55 per cent on remittances, 5 per cent on insurances, and 20 per cent on daily and personal spends. It was when I began to splurge a lot on luxury items that provided a fleeting feeling of bliss – which I called my ‘guilty pleasures’ – costs would often go beyond control.
“It gave me satisfaction when I purchased bags, gold sets, shoes, and many other costly branded items equivalent to 3-times or more of what a normal person could afford. For instance, I own around 300 pairs of shoes, each purchased for at least Dh300, and the most was Dh3,000 per pair.
“My liquidity was affected when I used up all my savings and emergency funds because the business income stopped during the pandemic. The main costs were my children’s school fees and their daily expenses, when I was stuck for eight months in my home country while still paying rent in the UAE.”
Crisis budgeting taught Miranda to reinvest her money
Miranda has now changed her strategy when it comes to managing her expenses. Whenever she withdrew funds from her savings, she would look to double it before putting it back in. Budgeting during her personal crisis opened her mind to being more prudent when allocating incomes.
As a single mother and an entrepreneur, she felt that she should know better how to manage her income and setting it aside wisely. The key, Miranda realised, is to invest more in other income-generating avenues rather than buying anything that depreciates in value over time things.
I used to pass the time by being a shopaholic and going to the mall when stressed; I now spend time reading books at the cafe, planning new products or concepts
“I should’ve paid attention to what is important long ago. That’s why I now run multiple businesses and most recently also bought a women’s beauty salon. I’m still looking for other business investment possibilities. I learnt a hard lesson: Instead of spending on luxury, invest in what generates income.
“When I got stuck in the Philippines, I told myself those items I purchased were lying inside my house in Abu Dhabi for nothing. I used to pass the time by being a shopaholic and going to the mall when stressed; I now spend time reading books at the cafe, planning new products or concepts.”
Cutting back on takeaway meals, another expat’s tale
While Miranda realised that making frequent splurges on luxury shoes and such will eventually prove costly, for Indian expat Keegan Domnic Po, another Abu Dhabi resident, it meant cutting back on cost-heavy takeaway meals to keep his budget from inflating. But he too learnt this the hard way.
“On average, I would spend up to Dh2,000 on food every month,” confessed Domnic Po, who has been living in the UAE for three years and currently works as an assistant operations manager in the healthcare field.
This forced Domnic Po to leave out budgeting for emergencies, and it only caught his attention when he suddenly had no money to send back home to help clear a medical bill for his family, and this coincided with other one-off expenses that piled up.
“My grandmother was ailing, so I needed to send Dh2,000 for her medical expenses. Due to this unforeseen situation, I also faced difficulty clearing out costs that piled up for renewing my car’s registration,” he explained.
No more cash set aside for emergency costs that piled up
So when Domnic Po realised he needed approximately Dh2,500 to renew his car’s registration, which included costs of repairs, insurance renewal and renewal of the car registration, that’s when he took decisive steps to restore his financial health to normalcy.
“I started grocery shopping twice a week, halving my monthly food costs to almost Dh1,000. I now cook meals twice weekly by following a meal prep plan. I improved my budgeting by lowering my food expenditure by eliminating takeaway meals,” he said.
“I now ensure that at least 10 per cent of my monthly salary is reserved for emergencies. So, I wouldn’t be in a compromising position where I did not have the required funds to deal with any cash crunches,” he said.
Domnic Po also detailed that he now sticks to a fixed budget, with 50 per cent of his salary set aside for rent, fuel and food expenses, 10 per cent for weekend entertainment, and the remaining 30 per cent making up savings that would send back home every month.
Key lessons
Although it’s a personal crisis which becomes a critical reason for many to revisit and reset their existing budgets that have turned problematic, for several others it can also be one-off medical cost that drives them to alter outward cash flow.
Regardless of what causes one to eventually realise they need to get their finances in order, the reason for cash crunches often boils down to overspending on wants and not the everyday expenses that are routine and cannot be significantly cut back.
Miranda’s life is “much easier and straightforward now”, she said, as she learnt to value money more and appreciate what she has. “I now wear simple sneakers, a T-shirt, pants or jogging pants, as opposed to when I would spend a lot of time matching my clothes with accessories and shoes earlier. I focus on adding businesses or purchasing real estate rather than overspending on perishable items.”
Meanwhile, for Domnic Po, it was key to identify alternate methods to reduce daily expenditure and improve monthly savings. This included steps like following a meal prep plan and cutting back on cost-heavy takeaway meals. So how would you go about reining in expenses that have gone beyond your control?
