Why Personal Financial Planning Is Important for UAE Residents

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Living in UAE is a dream come true for many, on account of its glamour, elegance, and lavish urban setting. But just like any other place, UAE has its perks and lows. Therefore, you must measure your lifestyle in UAE in a way that saves you from unwanted monetary issues. That is why personal financial planning is a must in today’s UAE. Whether you are a regular wage worker, an investor, or a successful industrialist, you need to have an adequately chalked out financial planning for your future. It is not just about planning your pension or emergency monetary supplies but also covers every bit of your financial life.

Here are some key factors that might help you figure out your financial planning in UAE.

Financial planning depends on three major factors:

• According to the Savings Index of 2017 by National Bonds Corporation, more than 41 % of UAE residents and savers had planned to begin proper financial planning by 2018. The increase in the savings rate was 4% annually, which boosted the economy as well. That is why the first step towards financial planning is to distribute your whole earning into small pockets schematically.

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Your finances include both your earning and costing: such as your regular income, liquid assets, fixed assets, and any other form of income source and any household, personal, educational, medical costing, taxes, and bills. Creating a proper chart for all the income sources and expenses will give you the initial idea about your financial conditions.

• Your goals are the main factor, which determines what kind of financial planning you need for yourself. For example, buying a house can fall under a short term goal for a middle-class UAE resident. At the same time, the same thing would be considered as a long term plan for a low wage menial worker. Figure out what kind of goals you want to achieve, before and after your retirement, and start saving or planning your money accordingly.

• Lastly, your financial planning also includes your urge to take risks. There are multiple benefactor mutual funds investment groups in UAE, who secure your monetary investments for future purposes. You can also opt for different life insurance plans from the beginning. But, all kinds of investments require an extensive understanding of the legalities involved and the plausible market risks.

Towards an Organised Personal Financial Planning:

Financial planning is not a one-time effort. It needs regular monitoring, practical visioning, and clear commitments for steady and useful output. It would be best if you take complete ownership of your finances at an early stage of your life to have a secure and safe future for yourself and your family.

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Step 1: Creating a Budget

It would help if you started accumulating your assets of all forms while in your mid-thirties, at least. Pan out a proper list of incomes and expenditures so that you can quickly figure out your surplus money every month. That surplus is going to be your investment or savings in the future.

Step 2: Paying off Your Debts

Once you know your financial reality, try to pay off all of your debts as soon as possible. This is most important as Debt is a criminal offense in UAE, which can lead to fines and imprisonment. Hence, try to pay more than the promised amount each month, as it reduces the inhuman interest rates and thus gives you edge. Delaying in payback can cost you a lot more if you are approaching your retirement age soon.

Step 3: Planning the Goals

Your financial planning also includes your immediate family’s needs and goals. Sort and prioritize the goals as per the need of time. With proper revision once in a while, your goals can always be kept track of without becoming a burden. Plan your child’s education, house/car possession, health schemes, and other things as and when you want. If possible, draw an approximate value of each goal so that you can identify which goal to accomplish when.

Step 4: Implementation/ Investments

Now is the time to put words into action. If you are a safe player, it will be better if you to keep your investment planning limited to insurance and banking facilities. You can open up a recurring savings account or a short term insurance profile. But if you dare to take the leap of faith, try out market reviewed, reliable investment brands at your convenience. Their market risks undoubtedly are higher, but they also give you way more return.

Step 5: Keep an Emergency Fund

You never know when bad times arrive. It is smart and wise to put aside a bunch of dirhams for any unpredictable events. Your regular schemes might come to default at times as well, and your emergency funds can act as a buffer at that time so that you can continue your financial planning without a stopgap.

Final Thoughts

As they say, ‘The younger you are, the easier it will be for you to save and invest for retirement.’ So, the first thing for successful financial planning is to cut out the procrastination and to keep a check on your lifestyle. Especially in UAE, the standard of lifestyle varies from time to time. Try not to get swayed by that. There are multiple award-winning financial planning professional groups as well. You need to be honest with yourself and have a logical and practical mind for well-organized personal finance management. Keep on reviewing your performance every month so that you can pull out money from unsatisfactory investments and reuse it wisely.

Financial planning maximizes your money, saves and invests for growth and stable developments, and lets you achieve your goals in time. Keep a regular check on the money, and be cautious with every move you make. After all, it isn’t rocket science!