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25 June 2017Last updated
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Jump-start your savings plan in January

What better time to launch a new financial plan? Finance writer Sonja Stephen from Compareit4me.com tells us how

By Sonja Stephen
17 Jan 2016 | 09:32 am
  • Source:Getty Images

‘Savings’ – that one word that really is guaranteed to get a reaction from everyone who hears it said out loud. Either they’ll have a secret smile, safe in the knowledge they put a plan in place years ago and now have a wonderful little nest egg growing in a bank account…or they will be filled with a flash of panic because, despite having thought about it for
ages, they still haven’t quite got around to putting any money aside.

Living in a country like the UAE, it’s easy to spend what you earn. There is always a brunch, lunch, boat party, beach day or new fitness class you can’t miss, and combine that with the increasing cost of living – both in terms of rent and grocery shopping – and it’s easy to spend as much money as you get in. Especially during the holiday season!

However, living in the UAE – a country where pensions and social benefits don’t exist – it’s even more important to have financial goals.

Time to start

If you haven’t started saving yet, don’t beat yourself up about it or start to panic, you are far from alone. In fact, a survey carried out earlier this year by HSBC found that saving for retirement was not a priority for 87 per cent of people in the UAE. Meanwhile, another survey by National Bonds Corporation revealed 77 per cent of those people who are saving in the UAE don’t think the amount of money they are setting aside will be enough to see them through retirement. Interestingly, a recent survey by compareit4me.com found that just 65.5 per cent of respondents save 10 to 50 per cent of their monthly salary.

Saving takes some serious discipline, but just small amounts saved regularly will add up over time. And while a wedding, children, new house or new car might not be on your radar right now, perhaps they will one day and then you’ll be so grateful of that small amount you put aside every month and didn’t even miss. It’s also worth considering, as awful as it is, that one day you may face an emergency and require a large sum of money quickly. And what would happen if you or your partner suddenly lost your job and were forced to head back home. Then you’ll be glad you committed to saving.

Make a plan

So where do you start? January is a great time to start, so make a plan, create a spreadsheet, or even download an app to your smartphone so you can access it quickly and easily. Do whatever you think you need to in order to stay disciplined and on the right track. Be realistic about what you want to save every month. Don’t try to fix your situation immediately and leave yourself short – that’s the quickest route to giving up on your plan and going on a spending spree. Instead, do it in small steps by aiming to save anything from 10 to 30 per cent of your monthly salary. Think of it as the tax you would be paying in your home country.

Saving might feel like a boring chore, but it really can be so simple. Setting up a monthly direct debit will allow you to have a fixed amount transferred from your main account across to a savings account automatically, meaning you probably won’t even notice it’s missing. Thinking of it like a bill, will help make it easier. You have monthly bills to pay, so just add yourself to that list. Pay your bills, pay yourself and then, if you have money left, buy that bag you can’t stop thinking about. Don’t choose the bag over your commitment to saving. In five years you’ll appreciate the money so much more.

Where to save it

OK, you’ve got your plan, but where do you put your money? It hasn’t always been the case, but savers in the UAE can now earn higher returns on their money. Earlier this year Mashreq announced a new savings product that offers 4 per cent interest, currently the highest in the market, and most UAE banks are now offering attractive savings and fixed deposit accounts too.

Interest/profit rates for savings accounts vary from 0.5 per cent up to 4 per cent, while a fixed-rate-deposit account could see a saver gaining from 0.55 to 2.5 per cent on an investment, depending on the bank and the term period. As with any financial product, anyone looking to take a savings account should ensure they compare all of the options available and select the one that will allow them to reach their goal most efficiently – or let us at compareit4me.com do all the boring hard work for you. Depending on your needs, we can providea list of the top financial products, including the best savings accounts.

Before you make your final decision about where to save your money, think about where you will be living in the future. If you don’t think a lengthy stay in the UAE is on the cards, a portable bank account would be the best option.

It’s important to remember, dreaming about where you would like to be in five, 10, even 30 years’ time is one thing, but like with anything you want to achieve in life, if you want saving to happen, you have to take positive steps to get there. Take those steps now, stay disciplined and those dreams you have of the future can easily become reality.

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Handy apps and sites

For most of us, personal finance is hardly the most exciting topic and can feel a bit daunting. Thankfully, there are now numerous apps and websites available to help make life easier.

Toshl Finance

Probably one of the most popular money-saving apps on the market, Toshl Finance allows you to manage all of your personal finances in one place. From monthly utility bills, to your daily coffee, you can track everything along with getting free tips on how to save better.

Mint.com

Mint helps you make sense of your money with very little effort and could actually prove to be a little bit life-changing. It lets you create budgets, manage your money from wherever you are and organise all of your bills from one place, meaning you’re unlikely to ever miss a payment again.

Spend Today

Rather than helping you to create a plan for the future, Spend Today helps you survive the week. By setting a daily budget within the app and imputing what you spend, it lets you know when you are about to go over, or if you’re allowed to buy that second coffee.

Daily Budget Original

Daily Budget Original calculates your daily budget based on your income and fixed outgoings. If you save on one day, you will have a bigger budget the next day. You can also make wish lists for bigger purchases like holidays and new cars.

Bank mobile apps

The days of queuing for hours at a branch of your bank are over. Keep track of your account and savings through your bank’s mobile app. Most of the UAE banks offer it as a service now, including ADIB, HSBC, ADCB, Barclays, Citibank, Emirates NBD.

By Sonja Stephen

By Sonja Stephen