Saving some money to get rich while leading a fast-paced UAE lifestyle can be a struggle. Here are a few tips to get you started. After reading this page, you will be able to know how to get rich in Dubai. One thing about which everyone will agree is that working hard and smart is the basic way.
The high rental costs, rising bills and a spending culture, the UAE is an expensive place to live. This is why so many expats leave with less than they arrive. A lot of people are attracted to the Emirates by tax-free salaries with every intention of saving each month, but their plans easily dismiss as they get caught up in the Dubai lifestyle which gets highly expensive. The dream of getting rich is shattered by many expenses. If you want to get rich in Dubai, you will have to control your expenses.
Seven in ten UAE residents are unsure of the steps needed to achieve their financial goals, a recent poll by National Bonds revealed. According to the poll of almost 400 residents conducted over the first nine months of this year, 69 per cent of respondents lack awareness about financial planning.
Step 1: First you have to create a budget
So how can you ensure you will leave the UAE with something to show for it? First things first: create a budget.
“The creation of a budget is nothing more than having an account of your income and what you are going to spend and plan for it,” says Rohit Garg, Head of Business Banking, Mortgages, Liabilities and Remittances at Mashreq. The bank is a keen supporter of financial literacy, and established Foloosy.ae to help people manage their money better. It also has a personal finance tool available online designed to help its customers’ budgets.
Garg says in its crudest form, a budget is no more than a ledger with incoming and outgoing costs. “All you need to know is, how much is my inflow and my essential outflows, and if I were to spend more or spend less, what is it going to result in in terms of saving or debt? How you balance all that is what a budget is.” This is the first thing to keep in mind to get rich and save money in Dubai.
Step 2: Plan for emergencies, in case
Every budget should include a portion for savings. Experts say there are three types of savings that people should plan for – short-term, such as for a car and unplanned emergencies; medium-term, for education or to buy a house; and long-term, for retirement. Most people know they must save for their retirement, but planning for the short-term is important, as it will prevent people from getting into debt due to unplanned expenses.
Efforts have been under way for several years now to shift the culture away from prodigal spending towards responsible saving in the UAE. Mashreq was the first bank in the Middle East to launch a savings scheme that offered customers both savings as well as a chance to expand their wealth. The Mashreq Millionaire campaign enabled customers to buy certificates of small denominations and enter into a draw to win. The bank now has one of the largest numbers of customers participating in a save and win campaign, says Garg.
Step 3: Pay yourself first
To build savings, there is a crucial rule when it comes to budgeting and saving. “Save first and then spend whatever you have left,” says Hamzah Shalchi, Regional Manager of Guardian Wealth Management. Spend where it is needed, otherwise save it for the proper time.
“Spend on your bills. Spend on your mortgage, and your car and whatever else you have. From your surplus income, make sure you make the saving you have committed to and then spend on whatever you have left at the end of it. Save first and spend later.”
Step 4: Start early
Just how much you save depends on what age and stage you are at in life, explains Garg. “Younger people will have different savings goals i.e, to get rich, and older people may have different savings goals,” he adds. “But again it depends on what your objective of saving is. However, you need to keep in mind that at any point in life you must have a savings related goal. If you save towards that goal, you are in a good place.” It is not that easy to get rich in Dubai, but with a big plan you can do it.
Step 5: Put away 20 per cent
Noel Leary, Head of DeVere Acuma for the UAE, suggests saving 20 per cent of your surplus each month. This one is better idea if you start acting on it. Money can't buy you all the happiness, so why not save it. At least, this is how you will get rich. Either you are in Dubai or anywhere in the world.
“There is always an excuse for why people don’t save, like Christmas is just around the corner. And then after that they have birthdays or holidays. There is always an excuse not to save, so 20 per cent of your surplus income. If you can put away that you are doing all right.”
There is, however, one scenario in which you won't be able to save money, says Shalchi. “Don’t save money when you have excessive debt.” Excessive debt is one of the hurdles in the way to get you rich in Dubai.
Step 6: Clear expensive debt
Yet experts are quick to warn that not all debt is bad. In fact, debt that is used to create an asset, such as a mortgage, is good, providing that the borrower is able to afford it.
The problem comes when debt is excessive. Credit cards are a form of expensive debt. So people with too much credit card debt should try to pay it off as quickly as they can, say experts. If you you are going this way, you will not be able to get rich in Dubai.
“The reason you get into debt is because of bad habits and if you don’t change those bad habits you will continue doing what you have always been doing,” says Shalchi.
Step 7: Be patient
And once you have paid off the debt, save, save, save. “It’s not a very complicated thing to understand that saving is good,” says Garg. Whether you earn a lot of money or not, if there is one step about "how to get rich in Dubai", it is to start saving and invest it at a better place. Use your mind and do smart work.
There is no magic formula where if you do this you are going to save a lot more. I think prudent principles around ensuring that you put away a certain part of your income for any goal you may have remain. If you really want to get rich, make big plans and start working on them even if you are in Dubai or living somewhere else.
