Holistic Financial Planning, CashFlow & Budgeting
Living in the UAE offers incredible opportunities, and with the right budget in place, you can make the most of your tax-free income, enjoy the vibrant lifestyle, and still work toward your financial goals
How to make a Budget?
Contrary to the popular understanding; the purpose of a budget is not to curb your expenses and deprive you! Its actual purpose is to enable you to do more with your money.
A budget can help you optimize your income and wealth in such a way that you can achieve your long-term financial goals while having enough to spend for today's needs and wants. It helps you gain control over your money, instead of being controlled by the lack of it.
A thoughtful budget empowers you to:
- Save for future milestones, like buying a house or funding a dream vacation.
- Stay on track with your financial goals.
- Avoid financial stress by gaining control over your money.
Here’s a step-by-step guide to creating a budget that works for you.
Step 1 - Pay yourself first
The golden rule of budgeting is to prioritise savings before expenses. Set aside a portion of your income—ideally 10%—towards investments or savings. Automate this process through a savings plan or Systematic Investment Plan (SIP) to ensure consistency.
If 10% feels challenging initially, start with a smaller percentage and increase it gradually. The key is to make saving a habit.
Step 2 - Determine your monthly income
When I say, monthly income, add only the regular and recurring income.
Only include actual income, do not consider the income you are likely to receive or notional income.
For best results, add your last 12 months' actual income from your bank account and take the average figure as your planned income.
Step 3: Categorize Your Expenses
Break your expenses into the following categories:
- Needs: Essentials like rent, groceries, utilities.
- Wants & Luxuries: : Non-essential but desirable expenses like dining out or subscriptions. Occasional splurges on items like gadgets or vacations.
- Savings: Contributions to your short- and long-term financial goals.
Using a budgeting tool, like the Expat Advantage Budget (EAB), makes this process easier. It helps you allocate and track expenses in these categories seamlessly.
Step 4: List and Organize Debt
Document all your debts, such as credit cards, personal loans, and mortgages. Arrange them by interest rate from highest to lowest. Focus on paying off high-interest debt first to save on interest costs, using strategies like:
- Debt Snowball: Pay off smaller debts first for psychological wins.
- Debt Avalanche: Prioritize high-interest debts to save money.
Step 5: Define Your Savings Goals
Savings can support both your short-term wants and long-term investments, such as:
- Annual vacations
- Purchasing gadgets or furniture
- Major life goals like retirement, property purchase, or children's education
A well-planned budget ensures guilt-free spending on these goals while building a secure financial future.
Step 6: Allocate for Charity
Allocate at least 1% of your income for charitable contributions. Giving back fosters fulfilment and adds purpose to your financial journey.
Pro Tips for Staying on Track
- Regular Reviews: Revisit your budget monthly to identify patterns and refine your spending habits.
- Family Involvement: Involve your household to align financial goals and reduce unnecessary expenses.
- Debt Consolidation: Consider debt consolidation options offered by UAE banks like ADIB or Mashreq to simplify payments and save on interest.
Ready to Take Charge?
Budgeting is the first step toward financial freedom. Start by downloading the Expat Advantage Budget (EAB), a powerful yet simple tool designed to help UAE expats optimise their tax-free income, track spending, and build wealth.
For more insights on budgeting, saving, investing, or protecting your wealth, schedule a Discovery Call today.
In our next topic, we’ll explore “Budget Like a Pro”—stay tuned!
