Find yourself living pay cheque to pay cheque? Well, you seriously need to follow these 10 money saving tips to getting your finances in order.
Stop living in the red and make the most of living in a tax-free region. While these tips might not make you a millionaire they will certainly lead you in the right direction.
1. Understand what you are spending
I always tell my clients that the first step before doing anything with your finances is to know exactly how much you are spending day-to-day – often the results will surprise you. There are many ways you can do this, from various apps such as Mint: Money Manager to a traditional Excel Spreadsheet.
2. Determine what you can live without
Once you have seen your complete financial picture determine what you can live with, but keep in mind that you will need to make some sacrifices to balance the books. For instance, so many people buy a coffee shop latte every day at the cost of Dhs15 but added up over a year that is a potential saving of Dhs5,475!
3. Plan for your lifestyle
As we get older we often stop saving in advance for big luxuries such as holidays, instead choosing to pay for them with credit and worrying about them later. This creates a cycle of bad habits and the potential to get yourself into debt. Try and plan ahead and give yourself regular manageable savings to achieve your lifestyle. If it’s hard to save in your bank account because you can see the money available, try having different bank accounts or send the cash home to ensure it’s in a safe place.
4. Live within your means
In the UAE especially, it is easy to lose touch with reality and get carried away with spending. The trick is before you purchase something ask yourself, ‘would I spend this in my home country?’. For instance, Dhs600 for a brunch is fine once-in-a-while, but perhaps not every weekend.
5. Have a goal
Ask yourself why you are saving, because if you don’t know what you are saving for you won’t get the best out of it. Do solid calculations based on your ingoings and outgoings and come up with an achievable savings contribution each month that you can stick to.
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6. Optimise your savings
Savings options vary depending on whether you are saving for a short term goal such as house deposit, or a long term goal such as a pension plan. Shop around and ideally talk to a professional who can get to know you and advise on products that are best suitable and can help obtain some interest on your money. Money should work for you!
7. Have your own savings pots
If you are married or in a relationship it is very important to have your own savings pot, even if you aren’t working full time. Of course you and your partner can still have joint funds but it is recommended to have your own financial independence and plan for a secure future.
8. Make sure you have the right priorities in place
Often there are so many things to pay out for each month but it is crucial you find room within your monthly surplus to save for everything at the same time. For instance, it can be tempting to prioritise saving for your children’s education over retirement, but both are equally as important. Again this goes back to weighing up all the factors and setting achievable goals. As a rule of thumb, look into save at least half of your monthly surplus.
9. Balance cash and credit
Everyone needs a little bit of credit to be able to get things such as mortgages, but be careful how much you leverage yourself. I would never recommend paying for everything on a credit card so perhaps keep it to big ticket items that you can definitely pay back and then for everything else use cash. It is easy to lose track of your expenses if you live on credit.
10. Remember life is all about balance!
Money matters can be quite daunting but don’t let it stop you enjoying life! No one is saying that you have to give up that pair of Louboutins, just make sure you can afford them!
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Words: Natasha Rocha Maggessi, Senior Financial & Tax Consultant, Guardian Wealth Management