Manar Al Hinai: Never too late to start a savings plan

I may not have invested my money in stocks or bonds, and I may not know how to construct a proper budget sheet, but I know one thing for sure and that is how important savings are — and how essential it is to start saving at a young age.

Our grandmothers knew best; they saved their income/wealth in the form of gold. My grandmother’s gold jewellery inheritance is one testimony to the importance of saving. However, when it comes to many members of the younger generation, saving their income is not a top priority.

A number of my friends fall in that category of “non-savers”, even years after being in the workforce. The other day I was out with a friend who has been working at a managerial post for the past seven years and is on a good salary. We were discussing our summer travel plans, and I urged her to travel to the same destination as me. She looked at me and said that would be hard at the moment as she has no money to spend on a one-week trip.

I was taken aback. I have not been in the workforce as long as her and I have saved a respectable amount. So I asked her what she meant. She said that because of her expensive taste in shoes and bags, she finds it difficult to save every month. She added that she knows this is a bad habit she needs to break.

Another acquaintance of mine faces a similar dilemma. She also has a managerial post and does not save her salary until the end of the month. Most of her salary goes towards purchasing fancy abayas, shoes and eating at five-star dining outlets. She got married and had a baby and says she now regrets not saving any of her income when she had no responsibilities.

Money management is a problem not restricted to young people who live in the UAE — it’s an issue the world over. The ease of signing up for credit cards and obtaining personal loans only worsens the situation.

Take the United States, for instance; a 2012 poll by stated that most employees do not have an emergency fund in place, 42 per cent are not comfortable with the amount of debt they have accumulated and a third don’t have enough control on their cash flow to spend less than they make each month.

That is not to say that we should not enjoy the good money we make. But it is good to have a backup plan, and access to an emergency fund when needed. Most financial experts suggest saving 10 to 15 per cent of monthly income, and you could increase that percentage to 20 per cent after a while. Some financial planners also recommend setting aside six-months worth of income for emergency purposes.

That may not sound like a lot, but it’s something you could build up over time. The best way to avoid spending that amount is to agree with your bank to deduct it from your salary at the beginning of every month and transfer it to another account.

To avoid the temptation of spending her emergency fund, a friend of mine asked the bank not to issue her an ATM bank card for that savings account. She knew she would be too lazy to go to a branch and withdraw money from the cashier, and that way she could also ensure her money would stay untouched.

Start your savings plan by looking at your bank statements over the past three to six months, and see where you are spending your money the most. Then think of ways of reducing those expenses. Are there any memberships you are not using?

Become a better shopper by switching from branded to generic grocery items. You would be surprised at the amount of money you could save by making small changes to your shopping routine.

The earlier you start developing good financial habits the better off you will be in the long run. It may be difficult for the first couple of months, especially if you are a big spender like some of my friends, but with time spending less will become natural to you.

Setting up an automatic transfer of money with your bank is one of the best ways to ensure this happens.

The importance of saving and money management should be taught at schools in addition to science and arts subjects. But it is never too late to hop on to the savings wagon. Small adjustments to our spending routine could benefit us all greatly in the long term.

Manar Al Hinai is an award-winning Emirati writer based in Abu Dhabi. Follow her on Twitter: @manar_alhinai

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What is the FNC?

The Federal National Council is one of five federal authorities established by the UAE constitution. It held its first session on December 2, 1972, a year to the day after Federation.
It has 40 members, eight of whom are women. The members represent the UAE population through each of the emirates. Abu Dhabi and Dubai have eight members each, Sharjah and Ras al Khaimah six, and Ajman, Fujairah and Umm Al Quwain have four.
They bring Emirati issues to the council for debate and put those concerns to ministers summoned for questioning. 
The FNC’s main functions include passing, amending or rejecting federal draft laws, discussing international treaties and agreements, and offering recommendations on general subjects raised during sessions.
Federal draft laws must first pass through the FNC for recommendations when members can amend the laws to suit the needs of citizens. The draft laws are then forwarded to the Cabinet for consideration and approval. 
Since 2006, half of the members have been elected by UAE citizens to serve four-year terms and the other half are appointed by the Ruler’s Courts of the seven emirates.
In the 2015 elections, 78 of the 252 candidates were women. Women also represented 48 per cent of all voters and 67 per cent of the voters were under the age of 40.