Carolyne Allmark: In your opinion, what is the biggest difficulty when it comes to saving money for expat parents living in the UAE?
Zeta Yarwood: People come with an idea of what they want but, when they land, it’s easy to get caught up with your social life and not actually save anything. If you are going to stay longer than two to three years, you need to start thinking about this early on. People tend to focus on making friends, because we don’t have the same support network as back home. You end up investing in the here and now instead of the future.
Emer O’Doherty: How early should someone think about talking to a financial advisor?
Julian Vydelingum: It should be something on the agenda very early on. It’s difficult when you don’t know anyone, to get that social support network, but most people come here to put some extra money away for their future.
Carolyne: So how does it work in terms of packages? What’s a broad rule of thumb?
Julian: It’s very difficult to broaden this. The first six months to one year here is different – you have rent, socialising costs and so on. It’s a case of goal setting. When someone comes to me, firstly I ask: “Why did you come?” Something motivated you. You know you need to do something, but you don’t know where to turn. In your home country, you probably didn’t have a financial advisor as – certainly in the UK and Europe – it is more commonplace for employers to provide benefits such as a pension or certain types of insurance. Here, you have to do everything yourself.
Carolyne: What are the options?
Julian: It depends who you sit down in front of. Some people get bombarded by financial advisors. Professionals in any walk of life, for example lawyers or accountants, don't cold call prospective clients, therefore a professional financial advisor shouldn’t either. Finding a company that is regulated – that’s a whole other talk. Knowing which one to turn to can be difficult as there are a variety of different regulators in Dubai. Dubai International Financial Centre (DIFC) is where most of the regulated companies are based and the Dubai Financial Services Authority (DFSA) is arguably the most stringent regulator in Dubai. When meeting with any financial advisor, you need to ask: How are they regulated? What qualifications do they have? What recourse do you have if something goes awry? How are they paid? If they only get a commission when you buy something, then it is easy to see how a conflict of interest could arise and how your advisor may not necessarily have your best interests at heart.
Carolyne: What are the equivalents of an ISA or pension here?
Julian: One of the tough things is people come for a short space of time, whereas a pension is a lifelong thing. Here, most other advisors will recommend long-term savings plans, factored on discipline, and tell you to pay yourselves a thousand dollars a month, for example. Those plans are inflexible, expensive and not that efficient. You need something that’s completely open, that you can stop and access when you want, without penalty, and can grow tax efficiently. A financial planning strategy needs to be in place. Most people here have a bit more disposable income and want to put some aside somewhere relatively safe and they need to make sure their financial advisor is trustworthy.
Carolyne: We’re talking about saving, but let’s look at debt. If you suddenly have to leave, then this can be a problem.
Julian: A lot of the problems come from short-term credit cards. It’s so easy to get credit here. You get so many calls from banks. Often, they’ll give you various offers and they don’t really explain what they mean.
Limara: People flee the country, but you’re not separated from your legal obligations, are you? You still need to take care of this debt.
Badi Fattah: You need to understand that each country has its own courts and they are limited in terms of their jurisdiction. If you do something here and go to the UK, or wherever you’re from, then it’s more of an international issue. We work with Interpol, too – the international authority that can bring someone back to the UAE provided that a final criminal judgment has been issued against the debtor in the UAE. For instance, most countries don’t recognise a bounced cheque as a criminal offence, which is the case here. So, if you have a bounced cheque, then that’s restricted to the UAE. But there is something called “context” and that depends on the facts surrounding the case. Which is why you hear stories of 2008, when people have just left everything because staying here meant going to jail.
Before that, you’ve got a lot of things going wrong, including poor personal finance management, which has led to that situation. That’s really what you have to avoid, which is why you have all these people here to give advice. A bounced cheque is something you need to be aware of. Whether it’s for one dirham or a million dirhams, that in itself exposes you to a potential criminal complaint. There are a lot of procedures in place. If it’s an amount that’s small, you can settle the amount with the other party at any time prior to judgment and avoid a criminal record.
Do not sign a cheque for an amount that’s not in your account, because that’s seen as being fraudulent under UAE law should a cheque eventually bounce in the future.
Carolyne: What happens when you’re dealing with the death of a spouse?
Badi: The constitution of the UAE acknowledges that Islam and thus Shariah principles are generally encapsulated as the law of the land. In addition to that, you have various provisions and statutes under the law in the UAE that allows non-Muslim expats to apply the law of their home country. The thing about the UAE is that you have various approaches to achieve the outcome you want, which is why you need to seek advice from a legal advisor who tells you “this is what applies best for you”. Because there is no one rule that fits all.
It’s important to have a will in place, whether you have a federal will – i.e. a will made in accordance with the law of your home country, which is permitted under UAE law – or a DIFC will, which is under the DIFC laws but very similar to the English common law legal system. Obviously, there are pros and cons to both of these approaches. There are different aspects to it, which is why you need someone to navigate it for you. It’s not overly complicated, but someone who has an understanding of all the different approaches can give you an easy answer so you can decide what is right for you.
Emer: Do clients talk to you, Zeta, about the financial side of things?
Zeta: Absolutely. When you’re doing a life coaching programme, one of the first things you do is a “wheel of life” exercise where you look at all areas of their life and give them a mark out of ten for how fulfilled they are in those areas. One of those areas is finances. Most of that will come down to: Are you being paid enough? Are you saving enough? Do you feel confident in the knowledge of financial investment for your future? I wouldn’t give financial advice – that’s not my area – but you ask questions until they start to think about what resources they have and who can give them this advice.
Carolyne: What are the biggest surprises people have when they move here in terms of spending?
Zeta: General lifestyle. It gets to the weekend and the kids are bored. People are spending thousands of dirhams every weekend. We should be teaching our kids to thrive in boredom. That’s where the creativity, learning and growth comes from. That is when you’re really helping them to develop their brains. Kids can find pleasure in the simplest and smallest of things. But, I think – I don’t know if it’s a competition thing – a lot of parents take their kids places, and then other parents think: “I should be doing that”.
Emer: Schools sometimes feed into it as well. They have these exercises when you have to take your teddy to all these places. Sometimes you worry if your kid says: “We stayed at home and made cakes”. [Everyone laughs.]
Carolyne: While others go to the Burj Al Arab!
Limara: You have to learn not to care so much about that. My son is too young for this at the moment, so I don’t have that pressure. At nursery they can’t talk to each other about what they do at the weekend. But you are expected to live a certain lifestyle in Dubai. It’s very difficult to say “yes” and “no” to certain things. You have to keep your own goals in mind and try not to live outside your means or even close to your means, as we all know there are always problems waiting around the corner. You have to be prepared. You need to save and invest and have something to show for the time you spent away from your families.
Emer: Let’s talk about education planning. School fees take a huge chunk of our income.
Limara: Schools ask for huge payments in advance – they ask you to write cheques and you have to hope you have that money in time before they cash it. At the nursery, we take the cheques and then when it comes to the time they need to pay it, we call them and ask how they want to pay. Some people come in and split it across different credit cards… Some people just go too far for too long, trying to live in the same lifestyle and they’re digging a big hole.
Emer: From a financial advice point of view, what education planning packages are there?
Julian: Investment plans that are completely open. We wouldn’t say this is an education plan, but we would help people save into something or invest into something which is easily accessible and help them to compartmentalise and say: “This is for my child’s education. I’m not going to take anything from this because I’m going to need it in two years, five years, ten years…” For goals which are a bit more longer term, they may be able to take a bit more risk. It comes down to trying to forecast the cost of education, which is difficult here as fees go up every year from what I understand.
Limara: For me, and other people I know, it’s very difficult to plan that far ahead when you don’t plan on being here in that many years. But you could plan on being here for 15 years and leave after five. I guaranteed my parents it’d be four to five years. Now I’m edging on the fourth year and I have no intentions of going home any time soon. But it’s difficult to see so far into the future and – no offence – spend money on speaking to someone like you for something I have no idea is ever going to be a worry to me.
Julian: You almost have to take yourself out of the fact that you’re only here for, in your head, the short-term. You have to think: “Actually, in seven years, my child is going to be in secondary education and in ten years they’re going into higher education” and work back from there. Wherever you are is irrelevant – they’re going to need to be educated somewhere. It may be cheaper in the UK or Europe or somewhere else, therefore if you can save a little bit now, then at least you’re that bit further on down the line towards that goal.
Badi: Obviously, you’ve got a very valid point – how do you plan for something 18 years ahead when suddenly the laws or policies might change. The important thing is to have awareness and understanding – but I would recommend seeking legal or other advice, if in doubt, since as expats we shouldn’t assume the laws here are similar to the laws of whichever home country we are from.
Emer: How do we teach our children about financial planning?
Zeta: It’s not something that’s ever come up. I mean, clients talk about the value of money – how to teach our kids to work for money and how nothing comes for free, but not in terms of actual financial planning. I think they just assume that once they know how to do it themselves it’s something they can teach.
Julian: In schools they should teach basic budgeting, which is a key skill. If children were to learn the basics from now – “What’s my pocket money?”, “How much have I spent?” and “Can I save that to buy something bigger?” – that’s the basics of financial planning.
Zeta: The key thing is to start teaching your kids about delayed gratification. We are living in a society of instant gratification. Kids do something, they’re entertained for a bit, then they’re bored again and they’re dissatisfied, and it’s the same thing with money. Financial planning is all about delayed gratification. There is a correlation between how successful you are in life and your concept of delayed gratification. People who are in an instant gratification mindset tend to be less successful. They need to work towards something.
1. Julian Vydelingum
A chartered financial planner at AES International. Julian is a Fellow of the UK Personal Finance Society and committed to changing an outdated industry by focusing on unbiased financial education, simplification of complex matters and by working on behalf of clients to get them the best results possible. Julian has been in the UAE for 12 years and is newly married.
2. Carolyne Allmark
Carolyne is an assistant section editor with Time Out Kids. She is well-versed in the trials and tribulations of being an expat, financially speaking, having lived in the Middle East for three years with her husband and two kids.
3. Badi Fattah
Badi is a corporate and private client lawyer with Nasser Malalla Advocates & Legal Consultants, a full service UAE law firm. In addition to being registered with the Dubai Ruler’s Court as a legal consultant, Badi is also registered with the DIFC Wills and Probate Registry as an approved Wills Draftsman and has extensive experience advising on private client matters.
4. Emer O’Doherty
Irish expat Emer, who is an assistant section editor with Time Out Kids, has lived abroad for many years, having settled down in America, Oman and Dubai over the years. She lives here with her husband and two kids.
5. Zeta Yarwood
A qualified NLP Career Coach and Life Coach, Zeta lives her life to empower executives, professionals and individuals all over the world to have the career and life they want.
6. Limara Freeman
Limara is a mum of one little boy. She has lived in Bahrain and Dubai and is currently working as Registrar at Blossom Village Nursery.
7. Katy Gillett
Katy is the managing editor of Time Out Kids and has been an expat for 30 years, living across Bahrain, Qatar, Saudi Arabia and the UAE.