Finance
Money Management Strategies
Retirement Planning
For most expatriates, moving to the UAE is one way to
save as much money as possible in a tax-free jurisdiction.
The intention is to return home with a lump sum.
Another agenda is that of staying offshore for a longer
time, enjoying a better lifestyle, while planning for a
comfortable retirement.
Retirement may not be the foremost concern for most new
expatriates. However, it should be a consideration. Early
planning for retirement is a good way to ensure that you
actually have a secure plan in place.
That said, in theory, these plans can work. In reality, there
are a few unexpected pitfalls that many new and some
returning expatriates fall prey to. Below are a few to keep
in mind.
1. The UAE has a vibrant and expensive social life on offer.
From luxury purchases and posh vacations to fancy
brunches, it is easy to get caught up. Be careful not to
get carried away with the easy access with which you
can acquire things. Your savings will ultimately pay
the price and so will you!
2. You may receive a salary increase, which is great. For
some people, this means that they are able to purchase
a few luxury items or services that they have denied
themselves for a while. Try not to over indulge. Think
of a salary increase as an opportunity to save more.
3. UAE banks make it super easy for you to borrow money.
A credit card in the UAE is offered as part of a current
account application with a loan being offered very soon
after. These applications can be completed within a
matter of hours. Try not to fall into the trap of making
purchases against borrowed funds. No matter how
big or small the purchase, it is wise to wait until you
have had at least 6-12 months living experience and a
clearer understanding of the affordability to borrow.
4. Gauge your purchasing habits by asking yourself a few
key questions – ‘if you have to borrow in order to buy,
can you truly afford the item?’ Is the item necessary?
5. Remember your sacrifices. Many of us have moved
offshore to secure a better financial status. We have left
behind structured lifestyles, family and friends in this
pursuit. To move offshore only to accumulate more
debt is most unwise.
Article/Source: Money Management Tips and Strategies.
Below are a few steps to consider taking, in managing your
finances, that could improve your chances for early retirement
and financial stability.
1. Create a budget and make the commitment to stick to it.
Write down your ‘fixed’ and ‘non-fixed’ monthly expenses.
Seeing this on paper will help you to better assess your
spending habits. Compare your actual spending to your
budget to see where you’re getting off track. You can also
check out budgeting and expense-tracking software like
Microsoft Money.
2. Reduce debts by consolidating and paying them down.
Pay at least double the minimum payment plus the finance
charge every month. Use cash or debit cards instead of
credit for all purchases. If you don’t have the cash on hand,
don’t buy it.
3. Set up an emergency fund. It is important that you have at
least 2-3 month’s salary on hand in the case of emergencies.
Try saving small amounts of money (every 20AED or coins
count). Write yourself a check for 100AED each time that
you get paid and put it in a special account. An alternative
is to take a chunk of money from your savings and take out
a Certificate of Deposit (CD), which incurs a penalty for early
withdrawal.
4. Make a will. A will is especially important if you have children.
It enables you to name guardians to watch over them. A last
will is also critical if you own significant or complicated assets.
5. A credit report is very useful. Your credit history plays a big
role in many areas of life. Try to review your credit reports at
least once a year.
6. Find a cost effective jurisdiction in which to retire. Once
you are faced with retirement, you want to ensure that
the finances that you have are sufficient in providing you
with a somewhat comfortable standard of living. Aaron
recommends the following jurisdictions; Nicaragua, Vietnam,
Ecuador, Thailand or the Philippines. Keep in mind that
retiring in these locations may be subject to your retirement
package and other factors.
Article/Source: Tips 1-5 Ten Steps to Organising Your Finances Now and Tip 6 Five
Cost Effective Countries In which to Retire.
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