UAE Expats: How they struggle to save money

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When moving to Dubai, you are lured by the tax-free salary, the amazing shopping and of course the constant sun. Dubai has become a hub for expats who want move to the UAE to start a better life for themselves and their families.

Living in the UAE it introduces a new lifestyle and culture consumerism that many expats are not used to and eventually find it difficult to ignore the temptation of spending. Because when the weather is 25 degrees Celsius and the sun is glorious, why wouldn’t you want to spend the day at a five-star hotel pool? The intention to save can be overtaken by a compulsion to spend and see everything Dubai has to offer. It can often feel like a year-long holiday, especially in your first year.

So, what happens when you realise the holiday is over and you need to start thinking about your future?

Dubai is not all glitter and gold, although there is no direct tax, there are plenty of indirect taxes and hidden charges that result in high living costs.

A survey conducted in 2016 by compareit4me found that 30% of expats are unable to save a single dirham month to month, while 53% aren’t confident that household incomes leave enough room for savings. Which ultimately leaves residents falling into a debt trap.

Earning a tax-free salary and living in a tax-free country (not for much longer), is one of the main reasons why people leave their home countries, however, people often mistake tax-free as cheap living, which isn’t the case. Dubai is an expensive place to live – ranked in the top 25 costly cities. However, often essentials such as healthcare, rent and utility bills are much more expensive than expected, leaving residents struggling towards the end of the month. Rent in Dubai accumulates most of resident’s salaries, where cost of living is disproportionate to earnings, and the fact that an entire year’s rent is required to be paid in two, four or six cheques leaves little room for residents to save.

One of the most common mistakes that expats make when living in UAE is lack of research. Not all expats move to Dubai and reap the benefits, expats want to find affordable housing, and one of the reasons some apartments are cheaper is due to the area they are based in. So, if you don’t drive and think moving to Jumeriah Village Circle would help with your budget (average one-bedroom apartment costs AED 63,000), only to find that it is based nowhere near a metro station, and only one regular bus running through the area, so, whatever you would have saved on rent, will now go towards transport.

Living in the UAE, it can be tempting to follow the ‘Dubai lifestyle’. The UAE is lavish and expats can often feel like they are in a bubble of benefits and opportunities that they wouldn’t get back in their home country. Expats then often end up spending more than their pockets allow, which starts a snowball of undesired outcomes. It’s far better to avoid the bad habit of overspending from the get-go. That doesn’t mean you need to limit your fun though, it sounds mundane put it’s best to set out a monthly budget and once all your necessities have been paid, allocate money to the luxuries. That way you can have a good time without the guilt.

Most expats move to Dubai only as a temporary base for a few years, but, due to the lure of the emirate they find themselves here for longer. The transient nature of the UAE makes it easy for expats to forget about saving, however, it’s important to think about the future as there always emergencies that could happen, and in a country, that doesn’t provide welfare or room to fall behind on bill payments, ensuring you have savings can prove useful.

No one has a crystal ball but by not having a sound financial plan leaves many expats at a great disadvantage. And just like everywhere else in the world, you’ll be able to find cheap eateries and free things to do, not everything in Dubai needs to be seven-star.

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