How not to leave Dubai broke

It's not rocket science. It's common sense, really: If you earn Dh20,000 per month and have no money left in your account by month end, you are likely to retire from the UAE no better off than a tea boy. 

Yet this is the sad truth for thousands of expats who come here with dreams of making big money, only to end up broke with hardly any savings to write home about, after years spent on living the high life or lured by shopping festivals and discount offers. Those who succumb to the temptation to upgrade — to a nicer car, a bigger villa, the latest gadgets — are in effect trading their present for a bad future. They are de facto loosing out on their once in a lifetime opportunity of building up their life savings whilst being tax-free. 
Take the case of Richard, a European working in Dubai for seven years. The 42-year-old has no children, but has racked up a combined debt of Dh210,000 on five credit cards, and has a Dh90,000 car loan. His rent, food and bills take up most of his Dh26,000 pay cheque, with nothing left at the end of the month.

Dev, 40, a divorced airline executive, gets free accommodation and does not have a lavish lifestyle. But family commitments prevent him from saving anything.
He earns well, has no debt, but also has no savings — not even an emergency fund.
When you come and live and work in Dubai, the attraction of tax-free earnings would suggest that the majority of people would build up decent savings to help them in their future.

But the rapidly increasing fixed costs of living eat into monthly salaries. Large shopping malls and the ‘eating out’ culture — to name just two of Dubai’s attractions — take away whatever is left.
The temptation to upgrade to a bigger apartment/villa, a nicer car — and the high cost of schooling for children — is also a constant challenge for expatriate families.
So how does one get out of the rut? Probably the best piece of advice you can get is to take a step back: Accept that your time in Dubai with tax-free savings may be limited. 
Maximise your time here by listing your financial priorities. Most debt-laden expatriates have also had to part with their end-of-service (ESB) or "gratuity" benefits, which banks collect at the first sign that a person has lost his job.

In 2010, UAE authorities and the International Labour Organisation discussed establishing a pension fund for expatriate workers to guarantee they receive their ESB.
In March 2012, a senior official of the Department of Economic Development in Dubai (DED) said they have completed a feasibility study for an expat pension fund, which was to be launched by end-2012 after clearance from relevant authorities. How ever unlikely it may seem, if pushed through, Dubai could become the first Gulf state to launch a pension fund for expatriates.
UAE lawyer Mohammad Al Suwaidi thinks that a pension fund is a step in the right direction. “It’s a good idea, but it needs sound regulations from the start.”
Al Suwaidi said, however, that clubbing an employees pension fund with their ESB may be problematic, since by the definition an ESB - as per the very unique and tricky UAE Labour Law - is only due when an employee’s service comes to an end after a minimum period of service and grows over time as an employee’s salary rises.

Other experts also feel a pension fund would help protect expats in their old age.
Most expats are capable of saving at least 10 per cent of their salary, but they are reluctant to alter their lifestyle. There is a vast amount of expats who spend a lot, get into debt and leave broke. This applies especialy to younger Western expats and people earning less than, say, Dh8,000 per month who are struggling to survive, especially when they send money home for families.
UAE-based Americans and citizens of EU-countries do save and invest at least four times the equivalent of their counterparts back home.
An example is Andrew, a 55-year-old from Manchester, who moved to Dubai in 2006 with his wife. The parents of two started to save $500/£350 (Dh1,836) per month, and then grew it periodically. In recent years, the wife has paid all of her salary into their investment plan to prepare for retirement. Their joint investments now exceed $300,000/£200,000, with three or four more years of saving before going home.

Another British expatriate Robert, 56, a managing director of a consultancy agency, blames the weather and the many “distractions”. For much of the year it’s too hot to do anything else — either you stay at home or you can go to the mall. If you go to the mall, you don’t just go there to walk, you’re tempted to spend and buy things. Expats also face the situation of paying everything in advance — rent, school, etc.
Many expats come from countries where there are no school fees. Not many people have the luxury of their company paying for these expenses so they end up borrowing money to pay for these things. People come here and they do not realise that you need to pay for a lot of things in advance.

Another major culprit, as countless expats will have experienced, is the relatively easy access to credit cards.There’s no central database in monitoring the bank customers’ personal borrowings. This allows expats the opportunity to borrow too much money and too easily.


  • Pay yourself first. Include savings in your budget. Investing in National Bonds is a good start (it prevents you from buying things you don’t need, like more expensive cars or accommodation).
  • Think of it as rescuing the old man/woman (you in future) from the follies of the young man/woman, (you today).
  • Saving between 10-20 per cent of your pay is a good guide.
  • Have emergency funds – between two to three month’s salary — in a deposit account
  • Diversify. Do not to put your ‘eggs in one basket’. Hierarchy of diversification: a) Cash in the bank is secure and accessible; 2) owning a property, which generally increases in value; 3) combine other assets classes such as stocks and managed fund, as these offer good long-term growth potential

Live for today, but also plan for tomorrow. Life is about balance. Enjoy your time in Dubai, but work on personal financial plan
Balance your own interests against your family’s demands/needs. Due to cultural traditions among Asians, many send home a fair percentage of their salaries, which can sometimes be a drain and pressure on those people living here
Don’t buy a new car on mortgage, especially if your existing one still works fine

Basically, being in the UAE, you're on your own. No one is going to save you if your should be suffer a serious illness or be involved in an accident that incapacitates you. Taking outa proper insurance is a must - moreso here than in most places. You're an expat and your home country may not be inclined to help you if need be.

There are many types of insurance, but basic protection should cover income (or loss of it), health, life and investments. Buy insurance that works for you
Some insurance packages also offer investment-like features, allowing you to gain from market growth while protecting yourself and loved ones

Hedging is a way to guard against foreign exchange fluctuations. If you invest in a fund and the growth is good over a 12-month period but the currency moves against your base currency, then this growth could be wiped out.
In Dubai, where the majority of people are paid in dirhams (fixed against the US dollar), a practical approach is to use dollar as the currency to start your savings. Then you could switch to your base currency in the future when the currency exchange rate is to their advantage, said Ormond

- a few tips:
• Consider saving as a mandatory expense
• Open a savings account that’s harder to get to than your checking account
• Systematically (monthly) save to that isolated account on a regular basis
• Pair your raises with increase in savings
• Set milestones with rewards
• Write down expenses in three to six-month goals
• See where your money is going (A daily coffee may cost you only Dh12, but if you add that up over a one-year period, this could set you off Dh5,400)
Before buying electronics, jewellery or fashion items on impulse, wait 30 days (you might realize you don’t need those things at all. This could save you thousands by the end of the year)

Remember: Saver’s remorse is non-existent. No one complains about having money in the bank. But if you buy that new car, phone or tablet during a promotion, you may regret it soon afterwards. 
And you money will be gone.

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