Boost your finances in the Year of the Dragon

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This week, the UAE's Chinese community has been celebrating the Lunar New Year. And for those in the financial world, this year is particularly significant because 2012 is the Year of the Dragon - the symbol of power and wealth.

While being born in 1940, 1952, 1964, 1988, 2000 or 2012 - the years that correspond to this Chinese zodiac sign - may not guarantee you good fortune, it can give you a helping hand as long as you still have a good financial plan in place.

With this is mind, Visa, the global payments solutions company, is offering you tips on how to manage your money better as a way to celebrate this colourful Chinese festival.

Brian McGrory, Visa's head of consumer debit products - Asia Pacific, Central Europe, Middle East and Africa, has put together some simple but effective advice to help you improve your finances in the Year of the Dragon:

Chinese New Year brings a few superstitions with it, he says. For one, people start spring cleaning their homes on Lunar New Year's Eve to rid themselves of any lingering bad luck from the previous year and to get ready to welcome in the New Year. Chinese tradition has it that cleaning over the New Year means you'll sweep all of your good luck out the front door. It's also said that if you start the New Year in the red, you'll finish it the same way. But these customs were developed before we had such convenient tools as debit cards to help manage our money, so as we enter the Year of the Dragon, mix traditional wisdom with some modern know-how to get your finances in order.

The key to spending within your means is to know what your expenses are and to spend less than you make. A simple way to start is by creating a realistic budget that you can stick to - whether daily, weekly or monthly - whatever works for you. Now you need to prioritise your outgoings, sorting out the "must haves" from the "would likes". From this, set yourself goals to achieve throughout the year. You need to think SMART, which means setting yourself goals that are: specific, measurable, attainable, relevant and time related.

Mr McGrory breaks these down to:

* SPECIFIC

: be specific on what you want. Avoid just saying, "I want to save money". Instead, say: "I want to travel to Bali."

* MEASURABLE

: give your goal a benchmark. For instance, travelling to Bali will cost US$2,000 (Dh7,346) and you have $800 already saved. Saving the additional $1,200 gives you a measurable goal to reach.

* ATTAINABLE

: make your goal realistic. Saying you want to travel around Indonesia for six months, staying only in five-star hotels may not be attainable if you've only got $800 to spend on that holiday. Instead, think what is within your means. For example, "I am going to save each month so I can visit Bali for three days and stay in a three-star hotel."

* RELEVANT

: the goals have to make sense to you. It's not practical to work towards a goal that doesn't fit your needs. For example, if you are going to Bali for your wedding anniversary, you may not want to be staying in hostels and may want to save more for something a bit special.

* TIMELY

: set a definite target date. Set a date for your trip and work towards it.

It is important to remember that when you are spending throughout the month, you must stick to your budget and each of your goals. If you use a debit card, it is easier to keep within your means since each time you spend, the money is drawn directly from your bank account - you buy now, you pay now. And remember to keep track of your receipts, check them against your bank statement and make sure they tally with your budget. It pays to be organised.

At Chinese New Year celebrations, people wear red clothes, decorate their homes and streets with poems on red paper, and give children "lucky money" in red Lai See envelopes. Red symbolises fire, which, according to legend, can drive away bad luck. This is a great opportunity to start teaching the younger members of your family about the value of money and how to use it responsibly, Mr McGrory says. But it doesn't have to be a heavy lecture; keep it simple by asking them questions like: "what are planning to do with your money?" "Will you save any for that computer game or expensive toy you've always wanted?" Or even, "Have you thought about giving it to someone more in need than you?"

For older children, you can teach them to live within their means by opening a bank account that comes with a debit card. If they are lucky enough to have an allowance, you can help transfer it into their account and through their bank statements you and your child can keep track of what they have been spending. The benefit of holding a debit card is that they can't ever spend more than what is in the account and you can use it as a tool to sit them down and plan their expenses with them, helping them to budget efficiently and prepare them for financial independence in the future.

For more information, visit www.visamiddleeast.com.