With the cost of living ever increasing, Benita Adesuyan takes a look at how you can balance your books.
Most expatriates in the UAE come to the golden shores of Dubai seeking a better lifestyle and an increased wage packet. But for some that dream can quickly turn into a nightmare as the rising cost of living and the desire to upgrade a lifestyle and keep up appearances begin to take their toll. But if the situation is starting to deteriorate and the figures aren’t adding up, it is still possible to get your financial house in order.
Paul Jenkinson is a senior wealth manager at Globaleye and he says the first thing to do is address the problem. ‘Don’t bury your head in the sand – there are ways out,’ says the financial expert. ‘Contact your bank for help early on and they can help you restructure your credit cards and loan to a more manageable amount.’
Jenkinson has been working in the UAE since 2008 and finds that the most common pitfalls people fall into here are mismanagement of credit cards and the ‘keeping up with the Joneses’ lifestyle. ‘Some expats find that they are spending all of their income on debt repayments, and when they lose their job or their salary is reduced, they can no longer make ends meet, forcing them to leave the country or find themselves in jail.’
But living in Dubai doesn’t have to equate to a life of debt. Jenkinson says that with planning and budgeting you can still enjoy expat life and have a little bit put away for a rainy day too.
How to avoid the debt trap
• Clear your credit card balances in full every month. Many expats like credit cards for the benefits such as airmiles and cash back deals, but this only works in your favour when you pay in full.
• When offered three times your salary on a new credit card, request to have this reduced to one month’s salary or less. This avoids the temptation of running up debt you cannot clear.
• Use your debit cards rather than credit cards.
• Try to remember why you moved to the UAE in the first place – to earn more money and save for your future.
• Work out your monthly budget – what comes in, what goes out and what’s left over. Then decide what your necessities and luxuries are. Once this is done you should be able to commit to a monthly sum to save in an investment plan or put in an offshore bank account. Once this is set up you can have it so that your savings amount comes directly out of your account the day you are paid, so there’s no temptation to stray from the plan. One idea is to ‘tax yourself’ as you would be in your home country and use this as your monthly saving amount.
• The earlier you start saving the less you will have to save, and the more likely you will be to achieve your goals for education fees or retirement planning. The UAE is a pension free country and as the years slip by expats can find themselves falling behind on their plans for retirement.
• Seek advice from a good financial advisor – make yourself aware of the benefits and options to expats.
Your three things to get in order
• Set up a UAE will. It’s probably the most important piece of paper you will ever sign while living here – especially if you have children. A sharia compliant will covers your assets and ensures they go to the beneficiary of your choice, rather than be governed under Shari’ah law. Most importantly, if you have children you should arrange a will to cover guardianship and temporary guardianship in the event of something happening to you both.
• Get insurance for life, property and business. If there is a loss or an emergency, you or your family shouldn’t have to carry a financial burden due to poor planning.
• Open an offshore bank account. Don’t keep large amounts of money in UAE bank accounts that are subject to freezing should you be in an accident or have any legal problems. You don’t need to earn mega bucks to set one up, many can be opened with at least Dhs13,000 income per month.
For advice on savings, wills and pension plans, email firstname.lastname@example.org, www.globaleye.com.
More financial advisers in Dubai
Acuma Independent Financial Advice
Offering financial advice on a full range of financial services for businesses and individuals, including all savings and investments, estate planning, pensions and protection products.
www.acuma.ae (04 332 8582).
UAE Financial Advice
This company specialises in tax and insurance advice to US expats
www.uaefinancialadvice.com (04 457 3840).