Dubai: The year 2020 not only tested physical and mental resilience but also forced many people to evaluate their financial outlook and planning amid job losses and pay cuts.
There has evidently been a general sense of pandemic-related uncertainty hurting finances. Job losses as a result of COVID-19, impacted incomes of many families.
As a result, several families in the UAE have had to re-evaluate expenditures relating to house rent, utilities and other household expenses, and also loans, remittance, childcare, education and wherever else significant costs were involved.
One such Dubai-based Indian expatriate impacted by the pandemic is Cindrella Angela Mascarenhas.
An IT professional in her early 30s, Mascarenhas became the only breadwinner for a household of two adults, a new-born baby and two dogs, when her husband lost his job due to pandemic-related related redundancy witnessed in the hospitality sector. “Our financial situation changed overnight. We had to quickly rework our finances, clearly budgeting non-negotiable expenses and ones that we had to reduce.”
Prior to her husband’s job loss, Mascarenhas used to allocate almost her entire salary towards creating a decent saving for the future. The monthly household expenses, including rent, utilities, grocery, fuel, personal and pet care costs would be deducted from her husband’s salary. After his job loss, there was one salary to rely on, while taking on additional expenses as they had a new-born baby.
Our financial situation changed overnight. We had to quickly rework our finances, clearly budgeting non-negotiable expenses and ones that we had to reduce.
“We took a few financial decisions immediately after my husband’s redundancy. First, we paid off the car loan with a portion of his end-of-service pay out to become liability free, factoring in the probability of relocation. The remaining went towards our annual house rent. Second, with 50 per cent of my accumulated savings we created a fixed deposit for our daughter, while allocating 25 per cent for monthly remittance to India. We kept aside the remaining 25 per cent to shield against any local emergency without having to take a loan or borrow from friends,” Mascarenhas shared.
“That was our starting point. The next step involved careful evaluation of day-to-day expenses aligned with the single salary.”
Rein in monthly expenses
Pre-pandemic, Mascarenhas used to spend roughly Dh1,500 to buy monthly groceries, including non-perishables and a small quantity of perishables from a hypermarket. Another Dh700 would go towards weekly purchases such as milk, yoghurt and vegetables from the local grocery store.
“From Dh2,200 we reduced our monthly grocery expenses to almost Dh1,300 by shopping at the Deira Waterfront Market. We buy everything from meat, fish, fruits and vegetables to spices, rice and lentils from the wholesale market in bulk for the whole month. The price of fish and meat at the Deira Waterfront Market is almost 40 to 50 per cent lower than the hypermarkets. A 10kg pack of basmati rice now costs us Dh40, whereas we used to pay Dh45 for a 5kg pack of the same variant from a different brand at the hypermarket. Even if you add the fuel cost, it works out much cheaper to shop in bulk from the wholesale market. In addition, we buy some weekly perishables from the local grocery store, although much less than earlier,” Mascarenhas shared.
Meanwhile, certain expenses have automatically reduced such as fuel, Dh225 monthly, since Mascarenhas has been working from home and outings are occasional. Approximately Dh500 would be spent on grooming every month, which has reduced drastically as she visited the salon only thrice over a course of one year, each time spending much less than before. “Prior to COVID-19, we also used to have a house-help to look after our dogs and clean the house, spending Dh3,000 monthly. Soon after the lockdown, the help repatriated, and we decided to not hire anyone else.”
• Paid off car loan with a portion of end-of-service pay out to become liability free, factoring in the probability of relocation; with remaining allocated for annual house rent
• 50 per cent of accumulated savings a fixed deposit was created for daughter, while allocating 25 per cent for monthly remittance to India
• Kept aside remaining 25 per cent to shield against any local emergency without having to take a loan or borrow from friends
• Careful evaluation of day-to-day expenses aligned with the single salary
Tip#1: Ordering in and dining out tend to be major expenses, adding to the monthly outlay. Mascarenhas admitted that earlier they used to order food every two to three days, each time spending a minimum of Dh50-60, excluding dining out. Now they prefer to cook at home, therein saving a minimum of Dh350 per month.
Plan for non-negotiable expenses
In 2020, childcare was one of the new expense heads for Mascarenhas. “Being first-time parents, it took us a while to figure out the essential expenses versus good to have. For a large part of 2020, we used to order a baby formula from the US via an online platform, paying a premium not only for the product but also high delivery charges.
“In addition, due to COVID-19 related disruptions, we had to often pick up the product despite paying for doorstep delivery. Eventually we started researching for locally available options and found one offering similar nutritional value at zero delivery charge. This reduced our expenditure on baby formula from Dh530 to Dh200 without compromising on the quality.”
On the other hand, noticing rashes on her baby caused by the diaper, Mascarenhas decided to change the variant to a slightly higher priced one. Now a pack of four costs almost Dh200, up from Dh110. Meanwhile, she has mindfully reduced shopping for clothes and toys.
“I have allocated around Dh200 to buy essential clothes and educational toys for my daughter every quarter. I always compare prices on platforms such as Mumzworld, FirstCry and Amazon to get the best offers on bulk purchase, especially in case of diapers.”
Being first-time parents, it took us a while to figure out the essential expenses versus good to have
Besides regular expenses, saving towards a child’s future is crucial. Mascarenhas saves her quarterly bonus to increase the fund allocated for childcare and education.
Tip#2: Being mindful that children quickly outgrow items such as clothes, strollers, furniture and even toys, Mascarenhas suggests using authentic second-hand platforms to buy and sell baby products. As a new mother, she was initially apprehensive but on researching found some good online platforms to buy and sell pre-loved baby items like toys, therein minimising expenses and maximising the product lifecycle.
There are several such platforms in the UAE, from a generalist marketplace to buy and sell goods to specific platforms such as Baby Bazaar and Yalla Kids for pre-loved clothes; KIDDOS Toys Club and TOYIT for pre-loved toys; and Bookends.ae and House of Prose for pre-loved books, among several others. Mascarenhas also rotates and shares toys within her family and friend circle, which helps to divide the total cost while creating a large enough selection.
Create an emergency fund
Budgeting monthly expenses before the arrival of the pay cheque is crucial to keep on-going expenditures under check and plan for emergencies. “Over the past couple of years, we have tried to be mindful about budgeting. Especially since last year, I allocate approximately 7 to 10 per cent of my salary towards creating a pet care fund for my dogs’ medical and food bills that tend to be high. In addition, every other month I also try to set aside at least 5 per cent of my salary towards remittance for our aged and dependent parents in India,” Mascarenhas said.
Tip#3: Even before the pandemic, as soon as she became pregnant, Mascarenhas went a step ahead in her financial planning. Despite having a decent health insurance from work that covered pregnancy and childbirth, Mascarenhas saved around Dh2,500 from her monthly salary for any pregnancy related unforeseen medical emergency. Since the insurance covered everything, she ended up saving almost Dh20,000, which is now part of her emergency fund.
Besides emphasising the need for conscious financial planning and budgeting, the year of ‘lockdown’ around the world made people realise the adverse effects of loneliness. Socialisation is important and there are various ways in which people can still get together safely without burning a hole in the pocket. For instance, Mascarenhas shared that now they socialise more but at home therein saving cost while having fun. At the same time, she allocates around Dh500 for a special dine-out experience every month. She prefers taking her one-year-old daughter to the parks as opposed to paid play areas. By undertaking all these mindful measures, the Mascarenhas household has been able to navigate a year of crisis.
• Groceries, including non-perishables and a small quantity of perishables = Dh1,500 per month
• Milk, yoghurt and vegetables from the local grocery store = Dh700 per month
• Fuel expenses = Dh225 per month
• Grooming costs = Dh500 per month
• House-help to look after dogs and clean the house = Dh3,000 per month
• Essential clothes and educational toys for my daughter every quarter = Dh200
• Creating a pet care fund for my dogs’ medical and food bills = 7 to 10 per cent of salary
• Remit to aged dependents in India = at least 5 per cent of salary every other month
How money was saved during the pandemic:
• Monthly grocery expenses reduced from Dh2,200 to almost Dh1,300; Savings = Dh900 per month
• Fuel expenses of Dh225 monthly drops since working from home and as outings are occasional
• Grooming costs of Dh500 every month, reduced drastically as salon visits are only thrice over a course of one year, each time spending much less than before
• Post-lockdown, house help repatriated, and decided to not hire anyone else; Savings = Dh3,000 per month
• Reduced expenditure on baby formula from Dh530 to Dh200 without compromising on the quality; Savings = Dh330
• Saved around Dh2,500 from monthly salary for any pregnancy related unforeseen medical emergency
• Since insurance covered everything, saved almost Dh20,000, which is now part of her emergency fund
How much money was saved overall = Roughly Dh25,000/-