Saving money in the fast-paced UAE lifestyle can be a struggle. Rents are amongst some of the highest in the world, and the cost of living has spiraled over the last decade. That said, with tax free salaries and a sensible approach to your money, it is possible to start saving for future investments like education, weddings, getting on the property ladder or eventual retirement. As a general rule, try to save at least 10-20% of your monthly income each month.
Standard savings accounts generally offer a very low rate of around 0.25% interest, but banks will set up high yield Saver Accounts as long as you meet several criteria. You’ll need to ensure your account has a minimum balance of at least AED 3,000 while some will ask for as much as AED 50,000. Banks will then offer you premiums of 2.25% and above but the more flexible the account, the less interest you’ll be offered. There may well be limits on how often – if at all – you can withdraw from the account, and penalties if you don’t follow through with your payment schedule or dip below the minimum balance.
Contributions can be made on a monthly, quarterly or annual basis, as well as in the form of a single payment. The earlier you start saving, the higher the compound interest, and therefore the greater the investment. End payments can then be collected in a lump sum, or if you’re saving for higher education, spread across a three-four year period to pay for tuition fees.
Before signing up for a savings account, think about where you might be living in a few years? Perhaps a portable bank account would be better for your needs, or an offshore account.
As always, before deciding on which savings account to opt for, compare all of the options available to you.