Home Finances: The movers and the savers
Budgeting and saving money is not as difficult as it sounds, even in a city like Dubai. We talk to a bunch of sensible folks in the UAE, who spend wisely and invest wisely — without compromising on their lifestyle
Dubai is a city that’s very much in the now. Work hard, play hard is the anthem, as David Guetta or Wiz Khalifa would put it, no doubt, something many of the city’s denizens would have heard on the radio while driving to work. But in times of economic uncertainty, saving — for a &future home, for the kids’ education, trips abroad or just for a rainy day — seems to be the keyword.
Already, banks in the UAE have &begun catering to the demands of the new ‘saving class’, helping to restructure debt and pay off mortgages flung far and away through low interest debt consolidation loans. Several banks even spam you with promises of low interest loans to pay off homes and investments, especially geared towards Asian expats — by far the largest group of people sending money out of the Gulf. “It’s a very smart move,” says Lachmi Karnani, who is just one of &the many savers in Dubai. Every month, she sits down with her husband and plans out their expenses, something, she says, is vital to making it through Dubai’s expensive lifestyle.
“Dubai draws you in to spend your money, and I feel it’s a city that creates desires,” says Lachmi. “But that doesn’t mean it isn’t easy to save. There are many things people can do to save while in Dubai, or the UAE for that matter.” She is the self-confessed tight-fisted one in the relationship, while her husband’s the spender. “But we make it work, making sure that we put aside at least 10 per cent of our income tow-ards savings.” Their biggest expenses while in Dubai are, of course, rent and utilities. “Our biggest splurge is travel. We have been in Dubai for a few years now and have put aside money to travel as often as possible. Apart from that, our expenses include supporting our parents and putting money aside for the future. It’s never too late to do that,” she says.
The key is finding a balance, she feels. When you need to spend, spend, but make sure that it is budgeted for and don’t go overboard. “You don’t need to upgrade your phone every time there’s a new one, or every six months. And you certainly don’t need to buy clothes every few months!” When it comes to investing for the future, she advises, “Do what a majority of the south Asians do — take advantage of the competitive loan rates in the UAE to pay off property loans back home.”
She adds that it also helps you be smarter with your money. “It’s very easy to be swayed into expenses here. But when you know you have to make a loan payment on time, then you will diligently put that money aside. Think of it as saving by force,” she laughs. Paying off credit cards is also another important thing that people in Dubai should practise, she adds.
Indians in the UAE headed the top league of nationalities in the Gulf by sending a whopping $12.638 billion in remittances to their home country last year, while Pakistanis came in second with $4.151 billion, and Filipinos a close third with $3.457 billion. - Khaleej Times
BIG SPENDERS, LOW SAVERS:
According to a study by The National, a quarter of all employed UAE residents do not save any of their monthly wage, and 94 per cent live with financial worries and insecurity
The Karnanis are just one of several young couples in Dubai that are spending smartly and saving even wiser, but what about larger families with kids? Surely, they must find it much harder to make ends meet and also save for the future? Not according to Raya Diaz.
“Compared to the cost of living in my home country Lebanon, the UAE is not much different,” says Raya, a mother of three — two boys aged four and six, and a five-month old baby girl. “Of course, the incomes are higher here, which should mean more savings,” she says. Obviously, she adds, with all the temptations of living a luxurious life in Dubai, it’s very easy to be swayed into debt and nothing to show for it in terms of future investments. “But, I assure you, it is &possible to save. For example, skip the brunches! I know it’s famously trendy to do, but honestly, it’s not much fun for kids — even with kid-friendly ones — and they’re often crowded and noisy. Save them for special occasions,” says Raya.
Her other tip? Take advantage of all the free parks and beaches. “Dubai has many clean and safe beaches and parks. Take your kids out to JBR, for example, and spend time there. We often have lunch close by or pack lunch.” Another thing she encourages other families to do is take advantage of the facilities offered in residential apartment buildings and housing complexes in Dubai. “There are nice swimming pools, play areas, gyms and other things you can make use of. This means saving money on things like expensive gym memberships, or paid-for activities.
“On weekends, we invite friends over for a pool day and barbecue. It’s fun for the kids and the adults, and it costs much less than going to a fancy, trendy restaurant. Besides, the parents of the other kids get to relax a little while the kids play, at no extra cost!” Raya also advises new families to &shop wisely, stocking up on essentials by buying them in bulk at stores like Union Coop. “I buy diapers, detergents and other things every month, while doing the daily groceries from nearby supermarkets. It’s a great way to save on money and it all adds up.”
Raya says that her husband and her moved to Dubai many years ago with nothing to speak of in terms of savings. But, by saving every month and spending wisely, they have managed to invest their savings in a property here, while also maintaining one in Beirut. What’s more, they have started putting money aside for their retirement. “We still spend money on things like family holidays once or twice a year and give to charity when we can, but it’s all because we plan, budget and save,” she says.
For the Bartolatas, things are not much different. Their biggest expenses come in the form of rent and utilities. “We don’t have much control over the rent,” Donald says wistfully, “but we just adjust our budget based on the rent and work around it.” Both he and his wife work and support three kids back in the Philippines, but they don’t think that it’s impossible to save and secure a future for their family in the city of the now.
“We try to keep loans and credit card bills as low as possible. We just have one credit card and we use it exclusively for airline tickets, and we ensure that we pay it off immediately,” he says. It’s one of the things about having a credit card — pay it all off at the end of the month — he adds. Of course, one way they save money in Dubai is by avoiding the steep cost of education, instead, choosing to educate their kids in the Philippines. “It’s just not the cost, but they have a better time in the Philippines. When I look at kids here, I see most of them indoors and not &really getting to know their neighbours or enjoying the outdoors,” he says. But, he visits as often as possible, hence the credit card-funded tickets.
“Both of us work — that’s a common thing in Dubai, and most of the time you need both incomes to make ends meet. Basically, with my pay, we take care of the rent and paying off a mortgage back in the Philippines. Her pay is used for groceries and other miscellaneous expenses in Dubai,” he says. Donald is also putting money aside as a future investment. “Over the past few months, I have been using 5-10 per cent of my pay to invest in stocks in the Philippines. It’s our nest egg,” he says, adding, “there’s no point in just parking your money in a bank, especially here, since the savings rate is really low.” He says that it’s much better to put that money to use by investing in stocks. “There is a group of Filipinos in Dubai that helps other Filipinos get, and stay, out of debt while in Dubai and encourages them to invest in stocks and property back home. I urge others to seek help and get out of debt. It’s a never ending cycle that can financially cripple you,” warns Donald.
Just like Lachmi, Donald also &advises that people take advantage of the competitive loan rates in the UAE to pay off investments in countries like India and the Philippines, where local loan rates are much higher. “We have managed to almost secure a house by doing so, and it’s great that we have something to look forward to once we return to the Philippines.”
So, while many in Dubai face seemingly insurmountable debts and credit card payments, some individuals and families are being smart with their money and making their savings count, proving that it pays to save and invest in the future. Are you a part of the new saving class? firstname.lastname@example.org
Useful tips on setting budgets and financial security:
1 Make a budget you can live with, noting down every expenditure, whether it be the big things like rent or the little things like diapers.
2 Compare money coming in (income) to money going out (expenses). If you’re just breaking even or losing money you need to adjust your income or curb expenses.
3 Pay bills on time! For credit cards and loans, pay off at least the minimum amount. You’ll avoid late fees and related interest rate increases; plus, you’ll improve your credit score.
4 Always have an emergency fund. Ideally, you should save enough to cover six months’ expenses. It’s not hard if you save a fixed amount of your income every month.
5 It’s good to do a financial check up every six months or so, so you can adjudge your savings, retirement funds, emergency funds, investments, etc. Courtesy, Visa
Cause for concern
A YouGov survey carried out earlier this year found that 22 per cent of UAE’s expats and locals were concerned about the rising cost of living, and 15 per cent were worried about their inability to save