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Mind Your Money: Time for a mid-year financial checkup

Financial literacy empowers you to take charge and build a secure future

Have you ever wondered why, despite booming global economies and record-low unemployment in many regions, so many people still live paycheque to paycheque? The answer lies not in how much you earn, but in how well you manage your money.

Now, as we reflect on the first half of the year and look ahead to the second half, it’s a perfect time for a “financial checkup”. Despite the positive economic indicators, inflation continues to cause financial stress for many, compounded by a lack of savings and mounting debt. While increasing your income can alleviate some of these pressures, diligently tracking your finances is a straightforward way to improve your financial health. It all starts with a solid budget.

As a financial adviser, I see many young adults feeling stuck in a paycheque-to-paycheque cycle. But here’s the good news: it doesn’t have to be that way. Consider this a mid-year pit stop to get your financial engine revving again.

The global economy might be cruising along, but for many young adults, making ends meet can still feel like an uphill battle. That’s where financial literacy comes in. It’s the knowledge that empowers you to take charge and build a secure future.

Budgeting: Your financial roadmap

Think of a budget as your personaliaed GPS to your financial goals. Don’t be intimidated by the term! To get started, track your income and expenses for the last three months. Budgeting apps or a simple spreadsheet work wonders. Categorise your spending (rent, groceries, entertainment) to pinpoint areas where you can optimise.

Setting SMART Goals: Aim High, Hit the Mark

Vague goals are like driving without a destination. Instead, set SMART goals: Specific, Measurable, Achievable, Relevant, and Time-bound. Swap “save more” for “saving Dh2,000 per month for a down payment on a car in one year”. See the difference?

Saving: Your financial lifeline

Building an emergency fund is your financial safety net. Allocate a portion of your income to savings for unexpected costs and irregular expenses. This financial buffer prevents setbacks from derailing your progress.

Budgeting is a continuous journey

Your budget is a living document, not a one-time fix. Regularly review and adjust it as your income, expenses, and financial goals evolve. Remember, life throws curveballs, so be flexible. Don’t get discouraged if you need to make mid-course corrections.

Communication is key: Building your financial team

If you share expenses with a partner, open communication is vital. Discuss your financial priorities and goals together. You’re a team, working towards a shared future. A collaborative approach strengthens your chances of success.

Financial wellness is achievable. By following these tips, taking control of your budget, and making smart financial moves, you can steer your finances in the right direction. Remember, consistent efforts, no matter how small, lead to significant improvements over time. Consider this mid-year checkup a springboard to launch yourself towards a secure financial future.

Now, go forth and prosper!

A word on interest rates

Central banks might soon reduce interest rates. While borrowing becomes cheaper, it can hurt savers. Here are some tips to navigate this potential shift:

* Lock in high fixed deposit rates for a longer term.

* Consider variable rate debt for new loans. Existing debt repayments could decrease with lower rates.

* Hold off on high-ticket purchases. Lower interest rates might save you money in the long run, but be mindful of potential price increases.

In this edition of “Mind Your Money,” we emphasise the importance of financial education and diligent budgeting as crucial tools for achieving financial stability and independence. By implementing these strategies and making smart financial moves in anticipation of changing interest rates, you can take control of your finances and set yourself on the path to long-term success. Remember, it’s never too late to start, and small, consistent steps can lead to significant improvements in your financial health.

Sandeep S. Jadwani - ACSI, CIB (Head of Investment Advisory, Habib Investment Limited – Regulated by DFSA) is qualified, experienced and an award-winning financial adviser to High Net-worth Individuals. Been in the UAE for over 15 years, advised more than 1500 individuals and families to manage their finances and achieve their financial goals efficiently and effectively. Connect with him on Instagram @sandeep_investmentadvisor and Linkedin - www.linkedin.com/in/sandeepjadwanibestadvisoruae/