30 Apr 2020
There are over 6.5 million credit facilities in the UAE which include loans, credit cards, mortgages and overdrafts according to Nov 2018 stats from Al Etihad Credit Bureau.
3 out of 10 UAE residents aren’t saving at all, while 38 % only save 10% of their income (Payfort 2017 survey)
Salaries in the UAE are generally high for professionals, but so is the cost of living, and it’s also easy to get credit. Many expat professionals have fallen victim to the overspending and credit trap.
Tips to help live within your means
• Try to keep your credit card at 0 balance at month end.
“The high interest in the UAE is crippling and it only takes a few months of borrowing and missed payments before fees and interest put people into a debt spiral they may never get out of,” Tuan Phan of SimplyFl.org warns.
• When it comes to spending try the 50/30/20 budget as a guideline. Everyone’s financial circumstances are different (especially those expats who have a foot on two continents and are supporting two households), so use it a basis.
• This rule says that you should not spend more than 50 % of your salary on needs such as housing, food and transport, 30% on wants, and 20% on saving and debt repayment.
• Being in the UAE with minimal or no tax, and many expat packages covering housing, it is possible to save even more monthly.
• If you get an increase or a bonus, go half. Spend half on whatever you like. But save the other half so you don’t overinflate your lifestyle to a level your income can’t afford.
• If you want to buy a big item, first give yourself the cooling off period. Think how will you feel about it in a week or in a year? Never buy immediately.
• Being in a city that lives a high standard of life, it is easy to get distracted by all the luxuries everywhere. Ask yourself if you really need all of it.
• Remember why you came to the UAE in the first place. It was to save for your nest egg. Keep the vision in place. The last thing you want, is to leave the UAE after 10 years with no savings.
If you have fallen victim to this or have just arrived in the UAE, then chat to your deVere Acuma adviser to get a spending plan in place and keep the focus going. [email protected]
Please note, the above is for education purposes only and does not constitute advice. You should always contact your deVere Acuma adviser for a personal consultation.
* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.