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Managing your money is an essential skill, as it supports financial stability and long-term growth. Whether you've just moved to the UAE or have lived here for years, a strong financial plan can help you in many ways. To create a financial roadmap, review your bank account, spending habits, savings, investments, credit card usage, mortgages, and more. You must also understand the importance of responsible borrowing.
Open the Right Bank Account in Dubai
For most residents, opening a bank account is a fundamental step towards starting robust financial planning in the UAE. Choosing the right bank account depends on the way you’re paid.
If you are getting your salary directly to your account by the employer, a salary-transfer account usually offers the best value. On the other hand, if you're self-employed or don't receive a monthly salary, a standard current account may be a better option.
Before opening an account, check the minimum balance requirement and other benefits, such as debit card, internet banking, loan facility, and more. Many banks offer you quick access to personal loans if you have an account with them.
Save Money Every Month
No single percentage works for everyone, but many financial planners suggest treating 20% to 40% of your monthly income as a realistic savings target if your budget allows.
Usually, separating your spending into two categories, as mentioned below, helps you make a good budget:
- Separate Money for Your Needs: Rent, groceries, transport, utilities, and insurance.
- Separate Money for Your Wants: Dining out, shopping, entertainment, and subscriptions.
Pay for your essentials first, set aside your savings, then decide how much to spend on extras. Even saving a small amount consistently can make a big difference over time.
Build an Emergency Fund Before Borrowing
Before applying for a loan, try to build an emergency fund. This can help you cover a few months of essential expenses. This gives you a financial cushion if your income changes unexpectedly or something happens.
For money you'll need quick access to, a standard savings account is the better option. These accounts typically offer modest returns, but your money stays available whenever you need it.
If you've already built an emergency fund and don't need immediate access to part of your savings, utilise other investment options, such as a fixed deposit, which may offer higher returns in exchange for locking your money away for a chosen period.
Avoid Unmanageable Debt With Responsible Borrowing
Getting approved for a loan doesn't always mean it's the right amount to borrow. The Central Bank of the UAE (CBUAE) requires banks to follow a 50% Debt Burden Ratio (DBR) rule. This means your total monthly debt repayments, including personal loans, car loans, mortgages, and credit card instalments, cannot exceed 50% of your gross monthly income.
Responsible borrowing can prevent financial distress and improve your creditworthiness. When taking a loan, consider several steps: if you are taking a personal loan, compare interest rates, prioritise low-cost options, and explore debt consolidation.
Retirement Planning and Investing
Retirement planning and investing are also effective ways to manage your money efficiently in the UAE. This approach helps you prepare for the future while covering your current expenses.
Even if retirement feels far away, starting early gives your money more time to grow and reduces the pressure to save larger amounts later. Once you've built an emergency fund, consider putting part of your savings into long-term investments or retirement-focused plans that match your goals and risk comfort. The idea isn't to invest everything at once, but to make steady contributions that can help build financial security over time.
References:
https://www.emiratesnbd.com/en/help-and-support/empowering-you-to-borrow-wisely
https://ascend.bank/news/5-fundamental-principles-of-money-management-for-beginners/
https://www.moneyhelper.org.uk/en/everyday-money/budgeting/beginners-guide-to-managing-your-money
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