Many of us make New Year resolutions, but how many of those are about our finances? Making sure you are financially fit is as important as vowing to visit the gym regularly but once you’ve taken the initial steps is less time-consuming and you can do most of it whilst sat comfortably on your sofa. A bonus for many of us!
- Sort out your paperwork. Put all relevant financial papers in one place. That includes bank statements, information on accounts, life assurance and savings policies, copies of wills. In one big box if you must, but at least have it all together. It’s also smart to save important information to an email account you can access from anywhere.
- Keep a budget. Until you know what is coming in and at least as importantly, going out, each month you won’t be in a position to improve your situation. Too many people wonder where their hard-earned income went each month, so for a few months you need to keep a log of every Dirham (or whatever currency you get paid in) that you receive and every one that you pay out, no matter how little the bill. If you feel you are frittering cash away, note what you are spending it on. At the end of the month tally each column and you will see not only what is left over, but also where you can make savings.
- Set yourself a monthly spending limit. Once you have paid your rent or mortgage, your utility bills, loans and essential bills, give yourself a set amount to spend each week or month. Your pocket money if you like. If it helps, pay yourself an allowance in cash and leave cards at home as that way you will be far more aware of where the money is going.
- Shop around. Shopping wisely can lead to significant savings. The costs vary hugely between supermarkets so taking a little more time can lead to big savings on your grocery bills. Buying seasonally and locally, or regionally, can also be cheaper.
- Address those credit card bills. Paying the minimum amount each month will never get them paid off so you may need to tighten your belt and get them paid. Paying the high rates of interest is a waste of money.
- Put away the credit card. If you are tempted to use it again, leave it in your sock drawer or the back of the fridge and only take it out for emergencies. Don’t use it for daily expenses.
- Build up an emergency fund. Ideally we should all have money equivalent to three to six months’ outgoings to fall back on, whether due to redundancy, illness or to cover flights to visit ailing relatives. You never know when the rainy day will come so best to be prepared.
- Get insured. By the end of June this year all Dubai residents must have proper medical insurance in place. If you are an employer with fewer than 100 staff, the only remaining category of company, you need to start looking at this now. Likewise if you are self-employed or need to insure your dependents and domestic staff. If you have dependents or a mortgage, you need to make sure you have enough life assurance.
- Start saving. Even if you start small, it is still a start. If you need discipline, set up a standing order to move money to a saving account after you get paid so can’t spend it. Put coins and small notes in a jar each day, but get started.
- Plan for your future. The earlier you start the better and compound interest/growth can make a big difference. There are a variety of options to suit different budgets and circumstances but make sure you get professional and unbiased advice. Your existing investments and plans may also need reviewing in light of current circumstances and don’t forget to check that you have the best mortgage deal as well.
Happy New Year!
Should you have any queries, want to start planning for your future, or would like to review your finances, please do not hesitate to contact me at keren@holbornassets.com