Undeniably the booming economic status of Dubai has been attracting expatriates into the country for the past several years. And most of the people’s lifestyle has dramatically changed from simple to extravagant living.
This occurs for a lot of reasons and one of which is that they are caught in the “upgrade” culture. However, many are reportedly struggling to manage their finances ever since they have upgraded. So, in order to prevent this from happening, the following are few ways to not end up penniless when the time comes.
- “Accept that your time in Dubai with tax-free savings may be limited. Maximize your time here by listing your financial priorities.” Says Reg Ormond, managing director of financial advisory The Wealth Practice
- Save. This may be a very obvious way in order to avoid destituteness but many do not seem to get their heads around the word. During payday, they spend a lot; eat out, and just save whatever that is left of their paycheck – which is commonly none. But that should not be the case. Pay yourself first, take away the savings primarily instead. Saving 10-20% of your salary is quite a good start.
- Diversify. According to experts, do not put all your “eggs in one basket”. Hierarchy of diversification: Cash in the bank is secure and accessible; b) owning a property, which generally increases in value; c) combine other assets classes such as stocks and managed fund, as these offer good long-term growth potential
- Take Financial Advice. You will not lose anything when you hear other people out in terms of finances, especially when these people are expert at the area. It is important to get a broader view of what might be in store for you in order to maximize your money.
- Balance. Live for today, however plan for tomorrow. Yes, it is irrefutable that Dubai has a lot to offer, so enjoy them. But do not get carried away and forget about your future.
- Prioritize. Weigh your personal interests against your family’s needs. For sure by now you know the difference between wants and needs. If the budget is quite tight, it is vital to prioritize the needs against the wants
- Acquire Insurance. Experts can’t stress how important insurance is. It does not only protect you and your loved ones, but other insurance companies offer investment-like features that could make you gain from the growth of the market while you are at it.
- Hedge. In Dubai, where the majority of people are paid in dirhams (fixed against the US dollar), a practical approach is to use dollar as the currency to start your savings. Then you could switch to your base currency in the future when the currency exchange rate is to their advantage, said Ormond
Further ways to increase savings
- Consider saving as a mandatory expense
- Open a savings account that’s harder to get to than your checking account
- Systematically (monthly) save to that isolated account on a regular basis
- Pair your raises with increase in savings. The higher your saving is, the more you should put away for savings.
- Write down expenses in three to six-month goals
- See where your money is going (A daily coffee may cost you only AED12, but if you add that up over a one-year period, this could set you off Dh5, 400)
- Before buying electronics, jewelry or fashion items on impulse, wait 30 days (you might realize you do not need those things at all. This could save you thousands by the end of the year)