Dubai: Ramadan is the month of fasting and festivity, and it is also a time when household expenses tend to rise generally, especially when in a joyful, charitable or a celebratory mood.
Buying gifts for loved ones, donating money for charity and spending extra on grocery purchases and dinners – are among the few spending trends widely observed as the norm this month. Festivity budgeting hence becomes essential to manage money for any household in the UAE.
For Dubai-based resident Raza Ur Rahman, their family generally spends around Dh2,000 to Dh3,000 additional on food grocery purchases during Ramadan. Another significant spending for their family is contributions of Zakat (form of almsgiving) during the month of fasting.
“These expenses for us are well determined and known in advance. Even the amount in food increase is easily manageable, and we don't tweak our budgets to deal with Ramadan expenses,” said Rahman.
Budgeting Tip #1: Opt for bulk buying at the start of Ramadan
Rahman ensures the rise in spending of their festive expense is maintained within a reasonable range. “We prefer to go for bulk buying at the start of Ramadan; this helps us to reduce spending and overall management of our finances during the month.”
“Online shopping for us has overall increased since the last year. I have found that online buys are giving better value for money and makes things easily comparable,” added Rahman, who works as a finance controller in a multinational medical devices and healthcare company.
“However, for fresh food purchases - fruits and vegetables, we still prefer to go to the stores to buy as it's difficult to determine the quality online,” he said.
Budgeting Tip #2: Look for festive deals from the retailers and not offers on credit card
Rahman avoids using a credit card, especially for festive purchases. He believes it may instigate impulsive purchases as, during Ramadan, the tendency to shop extra is often observed. “I keep an eye on discount offers from the retailers, not the offers from credit card banks.”
“Whether it's food or gift purchase for family/relative or something for the home, there is something on offer during Ramadan, and retailers often advertise the deals on products. I consider exploring these offers as a good option than buying on credit. However, we stick to a spending strategy, to look for things that we need rather than being carried away with offers.”
“For us, the difference between Ramadan this pandemic and the earlier normal days of fasting is the gatherings for Iftar parties. This is not happening like pre-COVID days, making Ramadan celebrations simpler than usual. And this would mean substantial reduction on spends for many households,” said Rahman.
“Due to the restrictions necessary for COVID-19 safety, money spent on hosting family and friends will bring us an anticipated savings of 30 per cent of our festive expense that is about Dh1,500 of what we spend on outings and dinners. However, this year we will try to give the money we save for Zakat, playing our part in helping those affected by the crisis,” Rahman added.
Budgeting Tip #3: How saving pre-Ramadan can help adjust foreseeable extra expenses
Ahmed Shaikhani, a Dubai-based businessman, begins to save some money for Ramadan spending, around two to three months before the month begins. He puts aside an average of 5 per cent from his earnings, and it helps him meet his family's additional demands and fund other cultural requirements of Ramadan.
“The main area of purchases for us is food groceries, shopping, home décor and Eid gifts. Out of our Ramadan month budget, we usually spend 40 per cent on food, 15 per cent on home décor, 25 per cent on shopping and 20 per cent on Eid gifts as it is an integral part of our cultural values," Shaikhani added.
"I ensure my family sticks to the allocated budget in each category and doesn't overspend.”
Budgeting Tip #4: Knowing how to use budgeting apps to manage Ramadan expenses
Shaikhani uses a budgeting app to check on his expenses. “I put all my forecasted expenses one time in the app, and it alerts me about the status of my spending.”
“We set a planned budget for groceries and home décor, but generally, for us during Ramadan, the grocery expenses are lesser than normal days. However, the home décor and shopping spend increases and sometimes becomes hard to manage, said Shaikhani. “So, we mostly try to buy things before Ramadan to divide the burden.”
This is when listing out the required products and needs becomes essential in finding offers and Ramadan discounts – helping one get a better advantage on prices, Shaikhani added. “All these go a long way to enjoy the month burden-free.”
Money experts suggest how one can tackle expenses during Ramadan
An earlier survey by Dubai-based price comparison website Souqalmal had shown 51 per cent of the survey respondents admitted to spending more than usual during Ramadan. And 78 per cent of respondents indicated that they exceeded their budgets during the fasting month.
As several residents may be struggling with a tightening of finances in the backdrop of the pandemic, Ambareen Musa, founder and chief executive of Souqalmal.com advised people to not go overboard with their Ramadan spending.
Budgeting Tip #5: Temporarily hold off on some existing household expenses
Musa recommended people cut back on their other household expenses to make room for the extra money they will need for specifically spending on Ramadan activities this year.
“Looking for money-saving deals and discounts is a smart way to go when shopping or dining out during Ramadan.
“Visit your bank's website to stay on top of the latest discounts and offers on Iftar and Suhoor dining during Ramadan. Some banks offer discounts of up to 20 to 30 per cent on your credit or debit card spend.”
Other discount websites such as Groupon, Cobone and VoucherCodesUAE.com also allow you to pick and choose discount vouchers that can help you save, she added.
Budgeting Tip #6: Overlooking terms and conditions of offer deals can cost dearly
During Ramadan, countless offers and promotional sales are advertised to people, in an effort to get them to part with their money in an impulse buy.
Hassan Owais Kazmi, head of assets division at Abu Dhabi Islamic Bank (ADIB) said although many offers are desirable, people must not make purchases on impulse but think carefully about what they can afford given their circumstances. “This is particularly important with the bigger ticket items, such as cars or jewellery,” Owais Kazmi said.
“Read the small print around an offer and always check whether there are any deferred fees or costs that may place stress on your finances at a later date.”
Generally, it is best to use cards for smaller items and other financing options for bigger purchases, Owais Kazmi further explained. “It is easier to pay off smaller items at the end of each month - a key principle for using cards to avoid profit fees and other charges,” he added. “Also, check the benefits your bank is offering during Ramadan.”
Budgeting Tip #7: Itemise the cost of all you need to buy in your Ramadan wish-list
Carol Glynn, finance coach at Conscious Finance Coaching, suggested itemising the prices for everything you need to understand what will you pay to purchase every item on your list.
“Don't forget life outside the festive season. If you track and review your finances regularly, you will already know your monthly financial needs. Glynn further recommended allocating the budget based on category and ranking of what is essential.
“For example, if you have Dh1,000 to spend and you decide food is the most important, next is gifts and the rest are all equal. In this case, you could spend 40 per cent on food - Dh400; 30 per cent on gifts - Dh300 and the remaining 30 per cent - Dh300 split between clothing and other celebrations such as eating out, etc.”