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23 February 2017Last updated
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Put an end to your debt stress

Money can buy happiness – if you’re smart. Sonja Stephen of Compareit4me.com shares her tips for staying on top of your finances

Sonja Stephen
1 May 2016 | 05:07 pm
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Life can be exhausting enough, trying to juggle a family, work, exercise and some kind of social life, without the added stress of money worries. But with the increasing cost of living, it’s getting even harder to stay on top of our finances.

When it comes to money matters, it’s all about finding and maintaining a healthy balance. You should always own and control your money, not the other way round. Because, unfortunately, when money gets tight, it’s too easy to become a prisoner to it. Even the most calm, care-free people can change very quickly when they’re dealing with the stress of financial fears.

Life is for living and while money can definitely aid that living by allowing us to do more of what we love, it can also have the very opposite effect. Cash problems are a massive emotional drain. None of us wants to struggle to buy a birthday present for someone special because we tipped the balance paying the annual car service. This is why it’s important to plan, be realistic, take steps to get into a healthy financial position and make an effort to stay there.

DRAW UP A PLAN

Knowing your financial situation is comfortable will be a weight off your mind, so planning and living within your means are both essential. Mastering the act of spending less than you earn (it sounds obvious, but many of us are guilty of ignoring this rule), will definitely help you in the pursuit of your financial goals. And managing your finances correctly means you will be able to treat yourself occasionally to something you really, really want.

So how do you do it? Work out your monthly incomings and then subtract all of your fixed monthly outgoings, such as credit card payments, the Dewa bill, phone bill, gym membership and so on. Then subtract variable expenditures (such as grocery shopping, socialising) and deduct a little more to cover your ‘fun expenses’.

These quick and easy calculations should highlight if you have money left over to save; if you are spending as much as you earn (which might force you to reassess some of those fun expenses so you can allocate money to a savings account); or are running at a deficit every month. This final one is really the outcome you don’t want, but if you do find yourself there, take immediate action to turn it around.

There are lots of budgeting apps available now which you can download to your smartphone – Wally, for example – that are perfect for helping you keep track of your daily and monthly outgoings. It’s often the case that just a few simple tweaks to our routines (choosing a beach day over brunch, for example) can really help a lot. You may think the amount you spend on food shopping or on going out at weekends is reasonable, but do you actually know how much it all adds up to, on average, each month? Seeing it all listed will be something of an eye opener.

PAY YOURSELF EVERY MONTH

If you haven’t already begun, don’t panic – you’re not alone. But it’s never too soon or too late to start. I’m not even close to being bored with telling people that every single month they should be looking to save between 10 and 30 per cent of their salary.

While living in the UAE has many financial advantages such as a tax-free salary, there is no pension scheme, which means it’s even more important to save for your future. Adopt the ‘pay yourself’ scheme. Every month, you pay off your bills and then pay yourself – into a savings account. You won’t notice the small amounts now, but you will certainly notice them in years to come, or in the event of an emergency, once they’ve grown into a wonderful lump sum. Many banks in the UAE now offer very competitive interest rates on savings accounts. There are also other options to get good returns on your money, such as National Bonds. Compare all of the options available to and then eliminate any future life stress by getting those savings started.

GET GOOD INSURANCE

Never underestimate the importance of good insurance, whether it be health, home or car insurance. It’s something that should never be left to expire and should be an expense that is always accounted for. It can end up saving you thousands if you spend time comparing the policies available and choosing the right one for you.

Car insurance is, of course, compulsory in the UAE, so if you drive, you will need to budget for the policy renewal annually.

While selecting the cheapest option available might seem like the sensible thing to do, when it comes to insurance it’s actually sometimes the worst thing you could do.

Insurance polices – again, this applies whether we are talking about car, health or home insurance – should be compared like for like. Choosing the first or cheapest policy you see may save you time, but it’s essential to spend time comparing the policy options for various providers. For example, the cheapest car insurance option may not include ‘car replacement’, which means that should your car be taken away for repair after an incident, you would be left to spend more money on a hire car or taxis.

Compareit4me.com recently launched a car insurance comparison site that allows you to compare like for like policies for many of the region’s leading insurers in minutes and then, when you find the best policy for your needs, buy the policy online with just a few clicks of a button.

And remember, home insurance, should never be one of those things where you think ‘I can’t afford it this month, I don’t need it’.

A home is expensive. Sadly, accidents do happen, but if you’ve spent time comparing policies and buying annual cover, should the absolute worst happen and you find yourself the victim of a flood or fire at home, your possessions will be covered.

When I walked into my apartment to find my stuff swimming thanks to a faulty washing machine, I was so grateful I had spent money on a home insurance policy. Suddenly around Dh800 didn’t feel like very much.

Don’t let money be one of those things that drains your energy and brings on illness. Be smart with your money and your spending and you’ll reap the benefits in so many ways.

Sonja Stephen

Sonja Stephen