We all want to save more money but actually doing it is an entirely different thing. Here are some top tips to help you jumpstart the process and become a smart saver.
Words by Tamara Clarke
Money – or the lack of it – tends to be a taboo subject, but let’s face it: we all want more of it. While earning more can put you on the right path, saving is the key to building a solid financial future. But sometimes getting started is the hardest part, so we’ve put together this playbook to help you stack more dough.
It’s not enough to know how much money is coming in; you should also know how much is going out, so keep track of your expenses. That means all household bills, every tank of fuel and every cup of coffee should be accounted for. The first step to saving money is to find out how much you spend and Lydia Hesse, a financial planner with Holborn Assets, agrees.
“It starts with tracking your expenses. Do this for a couple of months, which will allow you to gain a better understanding of how you spend your money. Cut out and reduce unnecessary expenses. Once you’ve done this, you can put a budget together, which should guide your spending,” she says.
Make a Budget
Now that you have clear insight into your spending habits, you can plan and manage your money better. Perhaps that morning cup of coffee needs to be made at home, or that daily lunch delivery needs to stop. Either way, seeing how you allocate your money is usually motivation enough to manage it better.
Lydia also stresses the importance of creating both short- and long-term plans. She suggests answering questions about the future like, How much do you want to live on when you retire? When will your kids go to university and what kind of fees do you need to save up for? Where do you see yourself financially in five years?
Work the Plan
After every dirham is accounted for and your goals are set, decide how much money you will save. Saving ten to fifteen per cent of your pay is often recommended but numbers don’t lie. If your expenses are high and you can’t set aside that much, don’t stress. Save what you can. No amount is too small and whatever you do, don’t sacrifice your savings.
“Pay yourself first,” says Lydia. “When you get paid, the first thing you should do is put money into savings and investments.”
Even better – you can make saving automatic. Most banks offer scheduled transfers between savings and current accounts, which guarantees that you’re stacking paper. Setting up an automatic transfer is an easy, hassle-free way to sit back and watch your savings grow.
Makin’ money moves
Lydia Hesse works as a financial planner but this professional takes her trade into the community, too. With the aim of helping women in the UAE take control of their finances, she created Love Yourself Financially, a safe space for women to learn and become more financially empowered.
Here are more of words of wisdom from Lydia:
What would you say are some common pitfalls when it comes to managing personal finances?
Not paying attention to how you save. Sure, you’re making more money, but that shouldn’t mean that you spend more. And getting caught up in living the good life in the UAE. It’s easy to buy coffee or lunch daily, go out several times a week for drinks and brunch every weekend. If you spend AED 60 per day on food, that’s AED 1,200 per month or AED 14,400 per year. Wouldn’t you rather save and invest that money?
Finally, not thinking long term. You won’t be in the UAE forever. What will your money situation be like when you leave?