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Saving Our (Financial) Sanity

We team up with some of the city’s most clued-up independent financial advisers to give you the lowdown on how to cut the spending, set some goals and actually save some money

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Fixing a budget is a bit like going on a health kick. There’s no avoiding that feeling of deprivation as you drag yourself past the chocolate aisle in the supermarket, but you try to do it anyway because you know it’s better for you.

And it’s just as easy to fall off the healthy eating wagon as it is to let spending spiral out of control, especially here in Dubai, where money can feel like it evaporates into thin air. We don’t brunch (that much), we don’t buy designer gear (unless there’s a really good sale on) and the kids need to burn off energy in one or two after-school clubs (OK, maybe it’s more like five – forgot about all those piano lessons).

So herein lies the problem. You don’t think you’re spending, but add up all those one-off treats, baby ballet lessons and the bargain staycation you just HAD to go on and there you have your answer. You need a budget.

THE PSYCHOLOGY
Why is it so hard?

Let’s take it right back to basics. When you’re technically “all grown up” with a responsible job, a house and a family, what is it that’s so difficult about saving money? Time Out Kids’ favourite life coach, Zeta Yarwood, shares her insights.

“There is a constant battle between instant gratification versus delayed gratification – ‘I want to feel good NOW rather than wait to feel good in the future’ – particularly when that feeling good in the future isn't 100 percent guaranteed,” Yarwood tells us.

So, are some of us just naturally thrifty and others can’t help but spend?
“Well, generally, you are either a spender or a saver, with a few sitting comfortably in the middle. It comes down to individual experiences of money. Has money historically been a source of stress and pain, or a source of pleasure? Savers find spending painful. The fear of not having enough money outweighs the instant gratification of spending. Financial security brings them comfort, but often no amount of money will ever be enough to make them feel 100 percent secure. Spenders, on the other hand, want the instant gratification. The pleasure spending brings is greater than the pain of not having any savings. The issue is when you are extreme in either habit. Extreme savers face regret and spenders face financial difficulties.”

It’s one thing to set a budget but another thing entirely to actually stick to it. So how do you tackle this?
“To make the mental shift and admit what things you buy are ‘need to have’ and what are actually just ‘want to have’, the focus must go from instant gratification to delayed gratification. Focusing on the pleasure of a better quality of life in the future. A quality of life you will deprive yourself and your family of if you choose to continue spending. Thinking about what pain might ensue if you don’t cut back in the short term. Being in financial difficulty at home is bad enough. But in a foreign country with different laws it could be a lot worse.

“If you're both not aligned in your financial goals, and cannot align them alone, then the only solution is to seek the advice of a professional. Whether that's a relationship coach or financial advisor. Otherwise not only will the financial rut remain, but the marriage could face extreme strain.”

THE BUDGET
How to start

When it comes to money management, the fear of the unknown can be the scariest fear of all and is often something we run away from, but Jason O’Connell, vice president with Holborn Asset Management reassures us that by taking some simple and practical steps, a secure financial future is within easy reach.

1) Close your eyes and visualise being in control of your finances and think about how that makes you feel. All goals should start with an end in mind. Sit down with your partner and/or family and talk through goals and worries about money. Everyone needs to buy into them and be pulling in the same direction. As an incentive, you could link a reward to achieving them – a family meal at your favourite restaurant, a day at the water park or even a nice break away from everyday life.

2) Be honest with yourself about where and how your income and savings are used. Write down all your fixed expenses – rent or mortgage, utilities, transport (include insurance, maintenance, petrol, tolls and taxis) school fees, groceries, entertainment, home help and don’t conveniently leave anything out otherwise you won’t be able to balance the books. Consider a budget by category, for example 50 percent fixed expenses, 20 percent entertainment, 25 percent debt and savings, 5 percent holidays and a contingency.

3) Balance the books. If you are unsure of where your money goes or you’re struggling to balance the books there are budget apps such as Wally which help to track where you spend your money. Tracking expenditure and progress is imperative if you are to achieve your goals and ease fears around your finances.

4) Set some goals. Start with ensuring you have an accessible emergency fund (one to three months’ household expenditure) for unexpected expenses. If you don’t have one, allocate a percentage of your income every month towards building one, taking priority over other savings and non-essential expenditure until you reach your target.

5) Too much debt? It’s time to identify the habits responsible, be honest with yourself and take baby steps towards big goals by tackling the habit(s) and credit cards one at a time.

6) Take pride in bargain hunting and compare the price of purchases online. Sallety.ae is an app that compares the price of goods at different supermarkets in Dubai and you’ll be surprised at the range of prices for everyday household goods.

7) Finally, if you fall off track, don’t lose faith and get straight back on your bicycle.

THE MOTIVATION
How to maintain it

Many financial planners will agree that maintaining the budget can be the most difficult bit on the road to financial success. In order to achieve budgeting success, there are three main traits that you’ll need to work on. Jessica Cook, of AES International, gives us some advice.

1) Stay positive. Don’t think that budgeting is a chore but rather think of the rewards. If you have never properly budgeted before, one strategy might be to “pay yourself first” or start small. Another small step is to save your change daily and it is amazing how fast that can add up. The easiest way to get your savings working for you is to set things up so that you automatically add a little bit each month to your savings. That way you won’t have to remember to make the payment and you won’t be tempted to skip a month.

2) Stay motivated. You don’t just have to budget for the boring stuff. Saving for retirement may seem dull, but it’s a must! Have different savings pots. Have one for longer-term saving such as a future property purchase or retirement and have another for something you can enjoy in the more immediate future, such as holidays. Revisit your budget and tweak it as needed. Your income, expenses and priorities will change over time. Adjust your budget accordingly, but always have one. I find that www.ynab.com (You Need a Budget) is a useful, free, popular budget-tracking app that can help you with all of this.

3) Keep your expectations realistic. People who are financially successful track their income and expenditure. There are several tools and apps available to help track expenses. They can help you to record purchases and keep an eye on daily spends. Check out www.mint.com.
Visit www.financial-advice-dubai.com for more top tips.

THE RESULTS
You can do it!

If – like us – you found yourself nodding with more than a modicum of (slightly guilty) agreement at much of this super-sound advice, there’s no excuse now to not at least make a start. And just think how much you’ll savour the smugness when your finances are back on track. Plus, you will hardly even miss that weekly Friday brunch habit that was bad for you anyway. Well, maybe a little…

SCHOOL SAVINGS
Waving your little one off to school, no matter where you are in the world, can be costly. But here in the UAE, with rising school fees, it can really hit the wallet hard. And with all of those additional “hidden costs” such as school trips, uniforms, school dinners to name a few, it’s important to take a close look at the budget allocated to the extras. We’ve pocketed some “tightwad tips” from Cursty Hoppe at www.whichschooladvisor.com, to ease the burden...

1) School uniforms can potentially cost Dhs500 to Dhs1,500 per child. Check out second-hand uniform sales, recycle old uniforms and label everything to prevent loss.

2) School trips can be on average Dhs60 per day trip and amount to around Dhs6,000 to Dhs12,000 for overseas adventures. Put aside a small amount every month so you don’t get a nasty surprise half way through the year. Find out from the school what trips are planned for the year so you can discuss them with your child, and decide which ones you can realistically afford.

3) Class collections can be, on average, Dhs100 per child, per year. These include teachers’ gifts, Spring carnivals and farewell gifts. Pool expenses and pay upfront at the beginning of the year ifyou can.

4) Think about after-school activities. Lots of schools offer free after-school clubs so checkout what’s available before looking at the costlier alternatives.

Spend wisely:
LIVE WITHIN YOUR MEANS

It’s easy to live it up and enjoy the life of a pampered princess in the city we call home. But, if you are intent on saving a dirham or two, it might be time to live a little more frugally...

1) Most communities here have communal swimming pools. Bathe with the masses and save on the massive DEWA bills which can come with having your own pool.

2) You have one shiny seven-seater, do you really need a second? Running a smaller, cosier vehicle can add to your bank balance and means you are doing your bit for your family’s carbon footprint, too.

3) Think about how many guests you have to stay each year on average. Do you really need all that extra space or could you think about downsizing?

CASE STUDY
Janice Farrell moved to Dubai just over a year ago with her husband and two children. Budgeting has become very important to her as a way to ensure they make the most of their time here and have a nest egg to take back to their home country.

“We have a monthly budget for our day-to-day outgoings, monthly expenses and money we want to save. The rest is for days out and fun activities. During the first few months, when everything was so new and there was so much to see, we probably spent more on activities (brunch, lunch, sightseeing, theme parks and so on) and we have cut back on that now in order to start being able to save something each month. There are a lot of upfront expenses when you move here like school fees, cars and rent, so it’s trying to balance all that out.”


Time Out Dubai,

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