Financial Discipline refers to your ability to stick to plans that one design for our money. The plans should be aligned with the amount of saving and spending. Personal Finance discipline refers to achieving set targets which may be short term financial requirements, long term goals- retirement, etc.
A majority of Expatriates want to settle in UAE, it is because the UAE provides them with a tax-free environment. HSBC Expat Explorer shows that nearly 67% of UAE expats have experienced higher disposable income. This is majorly due to the opportunity of earning higher incomes.
Expats must have the financial discipline for the following reasons:
1. Returning home in case of Emergencies
There can be multiple reasons for expats to return home. The reason may be any but it is important to realize that moving back to the home country is not as easy as it looks. Some of the common reasons for expats to move back are- expiration of the visa, illness of a family member, homesickness, difficulty in adjusting to the new environment, loss of job, etc.
The reason can be ample and may just come out of the blue thus being financially prepared for such circumstances can lead you to sound decisions for you and your family. If one is not financially stable and has excess cash it may lead to the accumulation of debt and dependency.
2. Return home to settle down
Expats working abroad work hard to earn more money and settle back in the home country with the savings. As many of the expats can’t settle in the UAE and Job market growth may not be as it is predicted. So, one should save from day to day activities to reach their financial goal as quickly as possible.
3. Limited credit available to expats
A fixed limit that is generally lower for expats is prevalent in almost all the banks. This can be a cause of tension as you won’t get the required funds. One should be prepared for slightly different interest rates and lower amounts in case one needs financial assistance. It is better to save more money such that personal loans in UAE at high rates can be avoided.
4. Reducing tension about Future Finances
Having a great deal of financial discipline helps in reducing stress about future financial needs. When one is aware that one has stacked up some amount of money for emergency use, one can take a breath of relief which will reduce stress and also improve health.
5. Expats are rarely offered any retirement benefits
UAE in 2019 has started looking for retirement benefits for expats as well, but nothing concrete yet has been established. Therefore an expat must ensure to secure its future by planning a saving fund for the retirement. The age of retirement is 60 years which can be extended up to 65. Thus one should carefully and consciously put aside some money for retirement plans.
6. In case of trouble, the first to lose jobs would be expats
This is a fact every expat is aware of and no matter how many reforms, the first to lose jobs would always remain expats. Thus, it is good to keep this in mind and maintain proper personal financial discipline. One should always remember this and save enough money to face any such adversity.
Tips to manage Personal Finances for Expats:
1. Make a budget
Making a budget is not only for expats but everyone, it can be difficult as you will have to segregate your wants and needs. Separate a fixed amount of savings, ideally, it should be nearly 20% of your budget.
Make a budget that you will be able to adhere, as this will eventually define the savings and budget you are able to maintain. Keeping and following a budget is not an easy task. But if one is able to maintain it can see eventually how easy and tension free life can become.
2. Invest at home
Investments are an essential part of securing one’s future. The Investments at home may be more lucrative than any investments made in a foreign country. You should focus on what is the major mode of investment in your country for example in India it is gold and property. It is of utmost importance to make a diverse profile both geographically and in instruments of investments.
3. Do not close your bank account at Home
If you have recently shifted to a new country it is better to keep all your options open. Keeping a bank account at home active means keeping aside some money aside. It is common to fall in traps, face frauds in a new country and it is always better to keep a secure backup option. It is possible that you will have to move back to your country and will need access to some money, this is the best way to keep some money handy in the home town.
4. Do the Conversions
Once you move to a new country you start spending and earning in a new currency. It takes time to actually understand the value of this new currency. So when you make purchases in Dirham it is better you make a mental conversion of it to your national currency as the value of one’s own currency is embedded in us very clearly.
For example: If you are making a purchase of AED 27, it may not seem much if it is converted and compared to 500 Indian Rupees.
5. Take control
It is important to take control of your financial and being in a different country it can be difficult as one may not be aware of the financial laws and policies. There are various ways in which one can learn about the financials of a particular country like reading newspapers, blogs, etc. Talking to your banker will also help you gain insights about the financial status and various investment options available to you.
Maintaining financial discipline is not only important for expats but everybody as it promises a secure future and reduces any tension associated with the future. But personal financial discipline is of utmost importance to expats are they face more uncertainty about the future.