Balmy walk in Dubai reveals some key financial tips to take on board

Chances are your financial dreams didn't come true in 2012. But 2013 is a new year, so it's time to make an action plan.

It's easy to loose track of our money if we do not carefully track where and what we spend it on each month. Silvia Razgova / The National

Attention all superwomen. Sasha, Lucy and Abby are strolling down Dubai's Jumeirah Beach Boulevard, enjoying the balmy breeze. "I think credit-card spending is a bit like Botox," says Lucy. "Once you start, you just can't stop." The three girls laugh. "Well, have a baby and both are out of the picture pretty darn quick," says Sasha, bouncing Oscar on her hip.

Hopes and dreams

"You know, I couldn't wait to toast 2012 goodbye," says Lucy. "This year is my year, the year I get my life in control."

"Let me guess," says Abby, "this time last year you thought the economy would be better by now, that you'd have landed that bonus, got a raise and, of course, fallen in love?"

Lucy and Sasha share a knowing, here-she-goes-again look. "How did you guess?" says Lucy, bracing herself for yet another financial lecture. Abby doesn't respond, she just continues to stare out to the horizon, enjoying the sun on her skin. "Just like all my clients," she thinks, "constantly living beyond her means, and destined to end up with nothing."

Chances are your romantic financial notions didn't come true in 2012. They sure didn't for Lucy, but 2013 is a new year, so let's learn from past mistakes and make an action plan.

It all adds up

Many of us have fallen into the trap of spending more than we earn, convincing ourselves it's necessary. Whether it's bad credit-card debt, the unpaid loan you took to cover the rent, or baby clothes and hospital charges - it all adds up, and quickly. To create wealth in your life, you must make a wealth plan. To do this successfully there are three habits you must master.

- Save regularly

- Invest

- Protect what you have

Learn from mistakes

After a while, Abby breaks the silence. "So, Lucy, what did you learn about money last year?" "Well," responds Lucy, "I learnt that credit cards are dangerous for me." The girls all laugh, but Lucy hadn't finished. "I also learnt that I have to live within my means, that I shouldn't rely on just one source of income, and that I must save and invest."

"Very good," says Abby, "But what else?"

"That I have to budget and plan and that, regardless of what I earn, I must watch what I spend."

"Well done," says Abby, impressed. "That's all true," says Sasha, enjoying the banter, "because let me tell you, even if the experts tell you the recession is over, it isn't in my house."

The challenge

"OK," says Abby, giggling, "I have a challenge for you. It's time for you to get your eyes on a prize which, by the way, is not a man," she says, with a wink to Lucy. "The prize is a gift for yourself."

"Sounds great," says Sasha, "tell me more."

"Well, it's a game that involves planning and saving," says Abby, ignoring Lucy as she rolls her eyes. "Rather than resent the idea of saving, as so many of us do, you need to see it as a skill, and a skill that is easily mastered when you get your eyes on the prize."

"The challenge is this: You must identify something you want to acquire within the next six months. Something big, like a vacation, a gorgeous piece of jewellery, a beautiful item of furniture or, Lucy, even a wedding. Now, the challenge is to pay for this item entirely in cash instead of using your credit card."

Lucy and Sasha look at each other aghast. "It's not as tough as it sounds," Abby says. "Identify the cost and count the months to achieving your goal to see how much you need to save each month. Now create your 12-month plan. I'll help you. You just have to identify your fixed monthly expenses, your variables, what's left over and a method of tracking your spending. If you can't plan your finances, you won't get there. You must know where you're starting so you know where you want to go."

Empowered

Already Sasha feels empowered to go home and work out her weekly shopping budget. After all, if she is going to launch her own business, she needs cash behind her.

"Trust me, this habit works," encourages Abby. "I have always written a plan. When I was 18 and studying at university, I bought my first investment property, and I did that by putting away just Dh20 [US$5.44] a week."

"Yeah, but who did you live off then?" wonders Sasha, who then felt guilty for being so catty. She knows Abby's intentions are good.

The first step

Know exactly what money is coming in and out.

Identify and list your monthly expenses:

- Rent
- Medical/life insurance
- Car repayments
- Credit card
- Electricity
- Home and personal loans
- Retirement contribution
- Gym
- Internet
- Phone
- Fuel
- Child care
- Clothes
- Food
- Entertainment
- Holiday
- Savings
- Other expenses

Janelle Malone is a writer, blogger and commentator on personal finance. Contact her at www.womenmoneyandstyle.com