Expats in The UAE & Money. 10 mistakes you want to avoid

It is not uncommon for expats for make a few financial mistakes when they move to another country but proper planning, research and the right advice will mean you do the right things. This is a list of the most common errors and while some may seem obvious, they are all made regularly. Knowledge is power so have a read and make sure you aren’t making mistakes that you could easily avoid

1. Lack of research before moving

It is important to remember that for most of us that the UAE isn’t just like home with added sun and sand. It may all appear very Western on the surface, with modern shopping malls, fancy five star hotels, and all mod cons but the laws and practices are very different.

Never assume that things work as they do in your home country and be sensitive to cultural differences.

For Brits, you can get loads of useful information by joining this Facebook group. Facebook – British Expats Dubai

2. Living beyond your means

With the almost year-round sun, living in the UAE can feel a bit like being on holiday all the time, especially in the first year. It can be tempting to live in a large villa in a smart area, to drive a brand-new top of the range car, and go to every concert whilst brunching each weekend but these things are expensive and not realistically affordable for most people.

It is far better to avoid the bad habit of overspending from outset, especially when the consequences of bad debt are severe. Of course, you want to have fun but it is best to work out a monthly budget and allocate money to the luxuries once you have paid for the necessities. This way you can have a good time without the guilt, or any negative repercussions.

3. Not planning for bad times

Life can appear to be wonderful but it only takes one thing to go wrong for things to collapse around your ears. That can be an unexpected redundancy, an illness, or a major problem with family back home. With no welfare system in the UAE and with the right to reside here linked to employment, it is especially important that everyone makes provision for themselves.

The first step is to build up an emergency cash fund. Ideally this should be sufficient to cover at least three to six months’ outgoings. As UAE bank accounts are frozen when a job ends, or in the event of death, it is best that these monies are kept outside of the country. An offshore bank account is ideal.

Anyone with dependents also needs to have adequate life insurance, just in case the worst happens. If you arranged this in a home country you need to check that this is still valid.

4. Not reading employment contracts properly

It is too easy to get excited about a new job offer, the prospect of a salary increase, and the promise of endless sunshine but it is also easy to forget to read the small print of a contract of employment.

Not all contracts are the same and there are financial penalties for breaking limited (fixed term) contracts which catch many people out. Your end of service gratuity is based only on your basic salary so if your income includes benefits such as housing allowance look out for how the total is split as you can end up losing out.

Companies can offer quite different benefits, even within the same industry, so if changing job make sure you are fully aware of specifics. Be aware that if you leave a job of your own volition with less than five years of service your gratuity will be reduced if you are on an unlimited contract and you forfeit it altogether if on a limited/fixed contract.

5. Breaking financial ties with a home country

When leaving your home country, it’s easy to think that what you leave behind doesn’t matter or that you can just pick things up again at some point in the future but that is not always the case.

If you close personal bank accounts it can be difficult to open a new one in many countries without proof of address going back at least a year and that can be a real problem on your return. Even when you are abroad there will be times when an account will be useful so it is best to keep one going, with a small balance in it at least.

In some countries, such as the USA, maintaining a credit record is important as that dictates the banking, loan and mortgage options following return. If you leave behind a bad debt it is likely to catch up with you one day.

Returning to a home country, or another country, may have tax implications too but professional advice on the right steps can minimise these.

6. Assuming inheritance laws are the same as a home country

Sharia law is the law of the land in the UAE and applies to all assets in the country. This is the case no matter where you are from so it will apply to UAE bank accounts, property, cars or other items. This may not be what you would wish and assets would be distributed in accordance to Sharia, not personal preference. Finding this out when a loved one has died can be a shock so you need to plan ahead.

A will written in a home country is unlikely to be recognised in the UAE and you may need to make other arrangements to protect yourself and your family. There are options to write wills that are recognised and action that can be taken to protect assets and also dependents. Having proper guardianship in place for your children matters.

In many cases, it is important that life policies are written in trust, something that is too often overlooked.

This is complicated subject but for many of us the rules are very different to what we have been used to. It is best therefore, to be aware of the implications and to plan accordingly. See link at end for more information on wills and guardianship.

7. Shopping as if in a home country

It’s easy to go to your nearest large supermarket and buy familiar brands but this can lead to grocery bills far higher than they need to be. Brands that have been imported from the West can be expensive and there are often local or regional options for the same products at lower prices.

The cost for the boring basics will often vary too and significant sums can be saved over a year by going to different stores and working out which offer the best value for money, especially when it comes to fruit and vegetables and the aforementioned boring basics.

8. Not saving for the future

It is far too easy to intend to get around to planning for your future but time in the UAE seems to go very fast and as the majority of expats have probably moved here for a higher income, it is important to you don’t put this off too long.

The End of Service Gratuity payments can build up over time but it is not an adequate replacement for proper retirement planning. As life expectancy increases, and the ability of governments to pay pensions decreases, it becomes even more important that we provide for ourselves. Simple maths and logic tells us that the earlier we start the better but that does not mean that you need to commit to a  restrictive 20-year savings plan.

Surveys show that two-thirds of expats leave the UAE poor than when they arrived and 20% are saving nothing at all. Of those who do save, a third are only saving 5% of their income. You don’t want to to be these people, so get in control of your finances.

9. Banking errors – not in your favour

Although unsecured credit, by way of personal loans and credit cards is easily available, the consequences of defaulting are severe. There are times when people need to borrow money, and credit cards can be a useful tool, but building up high levels of debt is never a good idea, especially when it happens to support a lifestyle.

The rates of interest on credit cards are high so the smart thing is to repay them in full each month. They should never be used to supplement income. Some cards have worthwhile benefits so by changing you could get better value for money and save on fees.

10. Assuming that being an expat means no tax to pay in a home country

“In this world nothing can be said to be certain, except death and taxes” said Benjamin Franklin in 1789 and it is still true today. Leaving a home country doesn’t necessarily mean you are exempt from taxes or obligations.

Usually income arising in a country remains subject to tax, even if you aren’t living there, and you may need to submit an annual return to the relevant tax authorities.

Leaving, or returning, part way through a tax year can lead to complications with overseas income being subject to tax, so professional advice can be very useful to avoid making a costly error on timing.

In summary

A little thought and planning can go a long way in preventing mistakes being made, mistakes that can be costly. I am not saying don’t have fun while living in the UAE, not at all, but planning for your future and financially protecting your family really matters.

I have been advising expats on planning their financial lives in the UAE for over a dozen years, and worked in the UK, a highly regulated environment, for some 18 years before becoming an expat. The right steps and plans matter as, does avoiding the wrong ones, so come and see me for a friendly chat to sort out your financial planning.

I write articles such as this one as part of the holistic personal financial planning service and that I provide to expats, and the general consumer, financial and legal information that I provide in The National newspaper, on Capital Radio UAE, and on the Facebook group British Expats Dubai.

To arrange a meeting to discuss any aspect of your personal financial planning, please email me at keren@holbornassets.com     Please take a look at the other useful articles on this website.

Useful links:

Wills & Guardianship:  Where there’s a will there’s a way to protect your family

Sharia Law: Sharia Law & your money in the UAE

Money saving tip: How to save money on your currency transfers

Life cover: Life cover for your family

Why critical illness cover matters:   Can you afford to have a serious illness? Facts for the UAE

Renting in Dubai: Need to know: renting in Dubai

Posted in General financial information, Life Assurance, Need to know, saving money, UAE Life | Tagged , , , , , , , , , , , , , , , , | Leave a comment

Wishing you all a very Happy New Year!

Image | Posted on by | Tagged , , , , , , , , , , , , | Leave a comment

UAE Public Holidays for 2020

These are the official dates of public holidays for the UAE for the coming year, as well as notable dates, so you can make a note in your diary now and plan ahead. Actual days of holiday for both the public and private sector should be the same and these are the dates announced by the UAE Government.

As usual, dates of Islamic holidays will be subject to slight variation, dependent on moon sighting, and others may also change.

With this in mind, this article will be updated throughout the year as any changes are announced.

 

 

 Occasion Date Day of the week No. of Days
New Year’s Day January 1st Wednesday 1
Beginning of Ramadan* April 24th Friday 0
Eid Al Fitr* May 23rd Saturday 4
Arafat (Haj) Day* July 29th Wednesday 1
Eid Al Adha* July 30th Thursday 3
Hijri New Year’s Day* August 23rd Sunday 1
Prophet’s Birthday October 29th Thursday 1
Commemoration Day December 1st Tuesday 1
UAE National Day December 2nd & 3rd Wednesday & Thursday 2
*Islamic holiday dates are dependent on moon sighting and are subject to confirmation and may change

 

I write articles such as this one as part of the holistic personal financial planning service and that I provide to expats, and the general consumer, financial and legal information that I provide in The National newspaper, on Capital Radio UAE, and on the Facebook group British Expats Dubai.

To arrange a meeting to discuss any aspect of your personal financial planning, please email me at keren@holbornassets.com     Please take a look at the other useful articles on this website.

Source: UAE Government Communications Office

 

Posted in General financial information, Need to know, News, UAE Life | Tagged , , , , , , , , , , , , , , , , , | Leave a comment

How much do those Christmas pop songs earn every year?

Every year, we hear familiar songs on the radio but have you ever stopped to wonder just how much the writers and performers receive from the repeated airplay? The amounts may surprise you as for the biggest songs the amounts are very large indeed. No wonder some artists refer to these hits as their pension funds!

The revenue goes to writers and performers, not always the same people, but if they both write it and perform it, the income is even bigger. Many artists have given it a go but not all are successful. The actual amounts below are amalgamated from multiple sources as the Performing Rights Society does not release this information.

Most of the best loved Christmas songs are not recent ,with the 70s and 80s being a golden era in terms of the UK charts, so the total royalties have really added up over the years. The law in the UK changed in 2011 so that now royalties last the entire life of the songwriter and another 70 years after they have passed away. In the US, they are payable for 95 years following a similar change in legislation in 1998. These earnings can support not only the writers and artists but also their dependents.

Here are some facts and figures about some of the biggest earners.

Continue reading

Posted in Capital Radio UAE, General financial information | Tagged , , , , , , , , , , , , , , , | Leave a comment

Seasonal Spending – hints and tips for a happier Christmas & New Year

As we head rapidly towards the end of 2019 the prospect of Christmas and New Year is daunting for many due to the cost of the celebrations. With Christmas being as much a cultural as a religious event for most people, and New Year being a party time too, this article is all about some hints and tips for budgeting at this time of year.

The holidays are a time when people want to splash out but it is all too easy to get carried away with all the advertising, tempting shop displays, and the associated pressure to make everything perfect.

The cost of living in the UAE is higher than ever and with many people having concerns about expenditure, and even job security, there are ways to cut back but still have a good time.

Continue reading

Posted in General financial information, Uncategorized | Tagged , , , , , , , , , , , , , , | Leave a comment

Sharia law & your money in the UAE

Whilst most people are aware that Sharia law is the legal framework used in the GCC countries, not all expats have realised that this can affect them and their money.

  • Did you know that on death your bank accounts and assets in the UAE will be frozen?
  • Did you realise that your spouse, or other family members, may not get access for many months?
  • Are you aware that your assets will not automatically go to your spouse?

Continue reading

Posted in Capital Radio UAE, General financial information, Life Assurance, Need to know, Wills | Tagged , , , , , , , , , , , , , , , , , | 2 Comments

News: Risk of UK State Pension freeze remains for British pensioners in Europe

Starting next week some 360,000 British pensioners living in Europe will receive letters from The Department for Work and Pensions (DWP)  confirming that their UK State Pension pension will rise each year for at least the next three years in the event of a no-deal Brexit. There are no guarantees that these increases will continue after this time. Continue reading

Posted in General financial information, News, Pension | Tagged , , , , , , , , , , , , , , | Leave a comment