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Residents must review spending

Cutting discretionary spending and payments on loans and utilities can be one option to save money.

The UAE residents have been advised that that there is no better than now to review their budgets as many of them bear the brunt of coronavirus in the form of job loss, salary cut or decline in their businesses.
Though spending on food items is expected to go up, personal finance experts suggest that cutting on discretionary spending, prudently using emergency saving funds and cashing in on payment holidays offered by local banks on loans and mortgages will help consumers to sail through successfully in these tough.
"Having a budget is the key, identifying income and expense changes are important and defering wants over needs is the most straightforward answer when it comes to family budget. While many residents may not be able to foresee the sensitivity of the matter at present, it is safer to see the longer-term impact and be ready for any change in income streams," said Rabia Yasmeen, research analyst at Euromonitor International.
While spending on non-discretionary spending such as food items will increase as people tend to cook more often at home, but, she said, this is counter setting expenditure on food ordering and dine-out, in many cases this may already be leading to cost savings.
"Cutting discretionary spending and payments on loans and utilities can be one option to save money. Creating and planning an emergency fund can be useful to set aside money for any unexpected event/expense, which can be aimed at saving the money equivalent to 3 months of your regular expenses to create a pool of funds to be available given any distortion happens in your current stream of income," she suggested.
Yasmeen also advised that deferment of rentals and bills can become very handy option when they are faced with extremely difficult scenario.
Ambareen Musa, founder and CEO of Souqalmal.com, said this is the time tap into emergency savings, but carefully. "Do not deplete it recklessly. And remember to replenish it when your financial circumstances improve."

Cash in on bank offers
In addition, the residents must cash in on the holiday payment facilities offered by UAE banks to their customers on personal and auto loans and mortgages.
"If your income has been affected by the Covid-19 pandemic, in terms of a layoff, pay cut or unpaid leave, the first step should be to get in touch with your bank. If you have an existing mortgage, personal loan or car loan, relief from repayments could just be one call away," said Ambareen Musa.
She stressed that those consumer who are struggling to keep up with repayments, they must speak to the lender and ensure minimum payment on credit cards to avoid any challenges later on.
"You may find yourself relying on credit cards a bit too much, especially if you don't have additional cash saved up. It may also be tempting to hoard items and put all your purchases on credit cards. But you need to be sure of your ability to repay your outstanding balance in the following month. If you aren't able to, expensive interest charges would apply, putting additional pressure on your finances," she said.
She advised that looking for alternative sources of income, in the form of exploring jobs where there is a greater demand for short-term workers can also be another avenue of income for temporarily unemployed workforce.
- waheedabbas@khaleejtimes.com