A new year is always a good time to make a fresh start, whether its losing weight, getting fit, finding a new job or sorting out your finances.
We all know resolutions made around this time of the year are difficult to keep, especially ones involving chocolate, but you cannot afford to slack when it comes to your money.
Here are 10 personal finance resolutions to help you enjoy a prosperous new year, so pick out the ones that work best
for you.
1. Get it together
You've been putting it off for a long time, but now is the ideal time to put your finances in order. Rummage through your drawers and root around online, and assemble all your bank and credit card statements, savings accounts, pension and investment plans, and mortgage or rental contracts.
While you are at it, dig out your motor, household, travel and health insurance policies, and details of services such as your utility bills, car rental, school fees, mobile, broadband and TV subscriptions.
You might be astonished to discover just how many financial commitments you have – and how they all add up.
Throw away old statements you no longer need, and maybe clip the rest in a folder. Feel better now? Good. That’s the first step over and done with.
2. Create a budget
The money may be good in the UAE and free of tax, but the cost of living is high and getting higher. Money can slip through your fingers, especially if you enjoy the odd brunch or two.
Tom Anderson, an investment manager at independent financial advisers Killik, who advises clients in Dubai, recommends drawing up a budget so you can see exactly what is coming in every month, and what is going out.
Work through your bank and credit card statements to see how you are spending your money, and where you are spending too much, he says. “This gives you a clear picture of whether you are living within your means and where you could make savings.”
Once you know where you stand, you can start cutting back.
3. Sweat the small stuff
Small savings can really add up over time. If you can save a few dirhams a day by skipping a few indulgences such as your daily frappucino, they could add up to a thousand or two when spread over a whole year.
Sign up to shop or hypermarket loyalty programmes, and put your points to use. Turn surplus food into soups or stews rather than scraping them into the bin. Wash your own clothes rather than using a laundry service. If getting a new car, consider fuel efficiency and the cost of insuring it. Do you need to pay for 500 TV channels if you only watch a handful?
Set yourself financial targets and reward yourself for achieving them. You need some pleasure after all this pain.
4. Put debt in its place
Nobody wants to run into serious debt in the UAE, the consequences can be dire.
Ambareen Musa, founder and chief executive of comparison site Souqalmal.com, says many expatriates have faced problems after racking up debt on multiple credit cards. “The balance can quickly spin out of control due to the high interest rates in the UAE, with the average annual percentage rate (APR) around 40 per cent. If you pay late payment fees on top you can quickly run up debts you cannot afford to repay.”
Pay your credit card bills on time, every month, and pledge never to miss a payment. “If you are struggling with credit card debt, ask your card provider to convert the outstanding balance into a fixed-interest fixed-tenure loan, to put a stop on the interest drain.”
Loan consolidation can be the ideal solution for borrowers juggling multiple debt repayments. “However, many who have exceeded their debt burden ratio may find they are ineligible to apply for it.” Ms Musa suggests either targeting the debt with the highest interest rate first, then the next highest, known as debt stacking. Or you could clear the smallest debt first, then the next smallest, known as debt snowballing. “Both are great ways of helping you pay off debt faster.”
Implement a personal austerity budget, by cutting out all unnecessary spending until the debt is cleared, Ms Musa says. If things are really bad, you may want to cut up your credit cards.
5. Build a pot of cash
Everybody needs a financial cushion, something to fall back on in an emergency.
Mr Anderson recommends you hold the equivalent of at least six months’ salary in an instant access savings account to cover your daily living costs and financial commitments.
Leave the money in an instant access account so it is readily available if you need it in a hurry. Automatically put some of your salary into a separate savings account every month until you have hit your target.
Mr Anderson says once you have built up your cash reserves the rest of your savings should be invested somewhere with a better return such as the stock market.
6. Look to the future
Once you have got your debts under control and emergency pot of cash for a rainy day, you must look to the longer term.
Saving is vital; there is no government-sponsored pension scheme for expats in the UAE, so you have to do it under your own steam.
Mr Anderson says the first step is to think about your objectives. “These might be buying a house in a few years’ time or, looking further ahead, generating an income in retirement.”
If putting money aside for five years or longer, you should consider investing in the stock market, as this should deliver superior returns, albeit with short-term volatility along the way.
Investing smaller sums is better than nothing, so to start with a minimum 5 per cent of your monthly salary, then increase this over time to 10 or 15 per cent, or more if you can.
7. Take charge
There is a global investment revolution going on, and it has finally spread to Dubai. Make 2018 the year you take advantage.
Exchange traded funds (ETFs) give private investors the opportunity to passively track global stock market performance for minimal cost.
This has liberated expatriates from dreaded 25-year insurance-based investment plans, with their notoriously high charges and costly lock-ins.
ETFs have no initial fees and rock bottom annual charges, ranging from 0.07 per cent to around 0.5 per cent, plus dealing charges, which means you get to keep much more of your money.
UAE expatriates can buy them on online platforms such as AES International, Interactive Brokers, Saxo Bank, Swissquote Bank and Internaxx.
Sam Instone, chief executive of independent financial advisers AES International, recommends a passive, long-term approach to investing. "Create a portfolio of index funds and add regular sums month by month, year by year, then sit back and let your money grow, while ignoring short-term swings in stock-market sentiment."
You may need to take independent financial advice to help guide your choice of ETFs, but shun anybody selling long-term insurance contracts.
8. Get the balance right
When investing, you must beware of falling for the hype, because there is a lot of it about. Recent months have seen head-spinning hype about bitcoin, which has soared in value by 1,800 per cent over the past year, as well as other cryptocurrencies such as ethereum, litecoin and XRP by Ripple.
Fawad Razaqzada, technical analyst at Forex.com, says the trend could have further to run despite warnings of a crash. “Investors have an unquenchable appetite despite bitcoin’s extreme volatility, and personally, I do not think it is in a bubble yet,” he says.
But most analysts warn against tipping large sums into cryptocurrencies right now, as the outlook is so uncertain.
Chris Beauchamp, chief market analyst at online platform IG, which has offices in Dubai, says the old investment rules apply: “Spread your money between different asset classes, such as stocks, bonds, cash and property, and between different currencies and regions. That way you won’t be wiped out if one asset class falls or an investment bubble bursts.”
Make it your resolution to build a properly diversified portfolio that reflects your attitude to risk.
9. Get it covered
Take a look at all your insurance policies to see if you can get a better deal elsewhere.
Shopping around is easier thanks to comparison website such as Souqalmal and MoneyCamel, which allow you to compare policies across the market tailored for your own needs.
Ms Musa says: “Instead of renewing with the same insurer year after year compare quotes, features and potential discounts on premiums before you commit.”
A good comparison platform allows you to find about the best price for the right policy, rather than just the cheapest, and will also suggest specific cover options and add-ons. You can get quotes from a range of insurers within 60 seconds, and switch policy in an hour or two. Comparison websites can also help you get a better savings account, credit card, car loan, personal loan, home, health and travel insurance.
10. Stick at it
You will need to keep applying yourself throughout the year to maintain your good intentions. Keep your paperwork in order by staying on on top of all new bills and statements that come in, dealing with them quickly then either throwing or filing them away.
If you have resolved to cut your spending or boost your savings, stick at it. Little and often adds up if you can last the course.
When policies, contracts and agreements come up for renewal, check whether you are getting a good deal, and be prepared to shop around for something better. It’s your money, show it who’s really in charge in 2018.
And finally, treat yourself to a chocolate every now and again. After all, you didn’t really think you would give up those, did you?