UAE: From buying stocks to creating emergency funds, here's how expats save money

There is an increasing number of UAE residents who are being extremely careful with their spending

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by

Nasreen Abdulla

Published: Mon 14 Aug 2023, 5:19 PM

For Rochelle, the bling life in Dubai has been alluring ever since she moved to the city five years ago. “I love being trendy and spending on branded clothes, shoes, and accessories,” she said. “Dubai has offers and sales all-round the year and I try to take advantage of these. However, that leaves me with no money.”

Now that she is getting married soon and is hoping to buy a new car, the Spanish expat has become more mindful of her spending. She has now signed up for a ‘Save Now Buy Later’ feature by fintech app Sav.

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“I’ve seen many of my friends here struggling to pay EMIs or pay off loans, and I don’t want to fall into that trap,” she said. “I’m willing to save a small part of my salary every month for the car.”

Rochelle is among an increasing number of UAE residents who are being extremely careful with their spending. From setting aside a fixed amount every month for investment to creating an emergency fund, many expats have a detailed plan to save up money.

Pay yourself first

Personal finance enthusiast and YouTuber Elie Irani said that his motto was to pay yourself first. “When they get their salary, a lot of people pay rent, costs, and loans, and then at the end of the month if they have some money, they save it,” he said. “That is the wrong way to go about things. I advise people to pay themselves first. When people get their salary, they must take 10 or 20 per cent or more if they can afford it and put it aside in a separate bank if possible.”

He also advocated building up an emergency fund. “This should be about three to six months of living expenses,” he said. “Those who work on a commission-based job should build more of a buffer to account for lean months.”

Indian expat, Mohammed Iqbal said he followed the pay-yourself policy but invests in various schemes in the UAE. “Every month I put aside a certain amount to invest into National Bonds. In addition to that, I have also invested in stocks like Salik and ADNOC. These are long-term investments for me as I want to be able to use them for my children’s education.”

Stay vigilant

Rochelle admitted that money management is a task, especially for expats. “I would say it’s difficult to manage money in a city like Dubai, as there are so many temptations to spend,” she said. “But at the end of the day, we need to save for life events, emergencies, and retirement. So responsible consumption is the only way to meet our short and long-term goals.”

Meanwhile, Elie warned people to stay vigilant about credit card debts. “If anyone has credit card debts, the priority is to pay that off,” he said. “I see people investing in stocks or crypto using credit cards. To me, that is like trying to fill a bucket with holes. Because the yearly interest on an average credit card is roughly 35-45 per cent. It is near impossible to make those kind of returns on any stock or investment.”

Tips to Investing

Elie shared his top three investment options.

Investing in a business

While Elie admitted that not everyone has the business acumen to invest in their own business, in his opinion it is a great way to increase the value of money, generate a second income and work on something they are passionate about.

Real estate

“Real estate has been a great investment option for eternity,” he said. “If people have the funds for it, real estate, especially in Dubai, is a good investment option.”

Stock Market

According to Elie, the stock market is the easiest investment option, in particular for those who were just starting. “It is important to follow a structured approach,” he said. “People should invest in index funds, which is like a basket of various stocks. They need to keep adding money regularly into this.”

He also added that those who opt to invest in something speculative like cryptocurrency should only invest what they are willing to lose as these could either result in loss or gains.

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Nasreen Abdulla

Published: Mon 14 Aug 2023, 5:19 PM

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