Good habits that will stretch your funds further

Seven tips to help you control your finances ahead of the holiday shopping season and adopt sensible spending habits that last a lifetime.

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Managing money. It’s not something we discuss out in the open, but personal finance is an important issue for all of us. Every time we receive our credit card bill or pay cheque, we make a mental promise to ourselves to spend less money, be more disciplined, and try to save more. But like most habits, it’s difficult to follow through, and most of us find ourselves in the same place the next month.

The millennial generation (those aged 18 to 35), who grew up during the financial crisis prioritise money management. According to, 31 per cent of millennials in the UAE say it is difficult for them to meet their expenses on their current income, and according to the World Bank only 19 per cent have deposited money into a savings account in the past year.

Simultaneously, the use of credit cards is increasing rapidly in the UAE, says the Central Bank. In 2014, the total amount of credit card purchases increased more than 50 per cent to Dh109.6 billion. And with holiday shopping approaching, it’s easy to get swept away and overspend on your credit cards.

This doesn’t mean that you can’t make a change this festive season. Whether you want to save for a getaway, budget for your gift shopping during Christmas, or set financial and savings goals for the coming year, there’s always hope. I am the chief executive of a personal finance application, and below are seven tips our users have found useful:

1. Know yourself

Sit down and take a look at where you stand. Gather up all your income information including salaries, bonuses, investments, debts and major expenses. A healthy budget consists of 30 per cent on housing and 25 to 30 per cent on living expenses (car payments, bills, groceries). Take advantage of the UAE being a tax-free state and use the extra earnings to pad up your emergency fund; life has been known to throw us some curveballs.

2. Keep track

Have you ever wondered, “where did all my money go?” Unfortunately, with personal finances ignorance is not bliss. Before getting in control of your money, you need to understand exactly what your expenses are. Check your statements for extra charges that can add up – like your afternoon macchiato, monthly subscription fees or health club memberships. The small Dh50 or Dh100 monthly charges can add up to thousands over a year.

3. Monitor your expenses

Keep a diary or use an expense tracker app to keep a record of your spending. Studies show that just tracking money makes you spend significantly less.

4. Pick a salient date

Whether it is payday or the first of the month, pick one day of the month to sit back and review the previous month’s financial situation. Look through your financial history in detail and take note of any patterns.

5. Switch to cash

While credit cards are extremely convenient, it’s easy to forget about transactions that are done with just a swipe. Studies show that we’re willing to pay more for items when we’re using credit cards, as opposed to cash. Withdraw the cash you think you’ll need for a week and leave your cards at home. This by itself will help you control your spending.

6. Make good use of your bonus

As end-of-year bonuses come, resist the urge to spend all the money right away. Use a third to pay off an old debt, a third for a future emergency fund then use the remaining third to treat yourself. Remember, your retirement fund should have 20 times the annual income you need to survive. Get a head start on it.

7. Make changes for the future

Once you’ve taken control of your finances, set goals to improve your situation. Keep yourself informed and understand if you’re spending more unnecessarily. Do some research or start a conversation with your friends to help you answer questions like “are my spending patterns typical? Do I save more or less than people like me?”

Saeid Hejazi is the chief executive and founder of Wally, a personal finance app available on iOS and coming soon on Android as Wally+.

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