In the final few months of last year, 40-year-old Tuan Phan had to fork out for the birth of his second child, car repair bills, and a trip home to Australia at a time when his housing allowance was slashed. Then, with the introduction of VAT, he says his financial confidence was at a low. “I dramatically cut family budget and personal spending in anticipation of a bad 2018 with the additional introduction of VAT,” says Mr Phan, an aviation meteorologist, who lives in Abu Dhabi. Mr Phan is one of many UAE residents tightening their belts in 2018. According to the quarterly Consumer Confidence Tracker from comparison site <a href="https://yallacompare.com/?utm_source=PR&utm_medium=PressRelease&utm_campaign=ConsumerConfidencePR">yallacompare</a>, released last month, almost half (43 per cent) are now feeling less confident about their financial health than they were this time last year. The tracker reflects sentiment in the first quarter of this year and is based on a survey of almost 1,500 UAE residents. <strong>_______</strong> <strong>Read more:</strong> <strong><a href="https://www.thenational.ae/business/money/almost-half-of-uae-residents-worried-about-increased-living-costs-from-vat-1.693648">Almost half of UAE residents worried about increased living costs from VAT</a></strong> <strong><a href="https://www.thenational.ae/business/money/volatility-in-the-pound-leaves-uae-expats-cautious-about-remitting-to-the-uk-1.727646">Volatility in the pound leaves UAE expats cautious about remitting to the UK</a></strong> <strong><a href="https://www.thenational.ae/business/money/the-expensive-bills-you-can-now-pay-monthly-in-the-uae-1.723942">The expensive bills you can now pay monthly in the UAE</a></strong> <strong>_______</strong> “A series of indicators on the tracker show a general lack of confidence around job security, the ability to keep up with the cost of living, and the prospect of a salary raise,” says yallacompare’s chief financial officer Jonathan Rawling. “This means that UAE residents are now allocating their resources differently, based on their confidence levels. For example, rather than saving or sending money home, they’re paying down debts. And rather than moving to bigger properties, they’re staying put. As a result, we can actually infer a greater level of financial prudence among UAE consumers.” Steve Cronin, the founder of <a href="https://www.deadsimplesaving.com/">DeadSimpleSaving.com</a>, which helps investors manage their finances, says job uncertainty, rising prices and several years of pressure on company budgets are making the UAE's residents feel more cautious. "Although the rising oil price should take some of the pressure off the regional economy, over-confidence is not good," he says. "If people are quietly confident but controlling their spending to prepare for potential setbacks, this can only be a good thing.” Jean Bonsaudo, 36, from France, has also noticed a rise in the cost of living in the last six months, which has made him economise. “When I arrived in the UAE 10 years ago, my wife and I were able to live on Dh5,000 a month for everything except accommodation," says Mr Bonsaudo, who lives in Jumeirah 2. "Today, we are very far from this figure. But we live in a villa which generates new costs, as well as higher costs for monthly bills such as Dewa.” Mr Bonsaudo, founder of Nighthawk Partners, which specialises in business development for companies not yet present in the GCC or Africa, tries to look three to six months ahead when he's budgeting to avoid being surprised by big-ticketed items such as rent, school fees and car insurance, or being forced to use credit cards or take out a loan.<br/> For the first six years of living in Dubai, Mr Bonsaudo's salary doubled every 18 months to two years, allowing him and his wife to save between 30 to 40 per cent of their monthly income. “I’ve been able to buy an apartment in France to generate passive income, and I’ve saved quite a bit of money,” he says. But despite his shrewd budgeting, Mr Bonsaudo still lacks confidence in knowing who to trust to invest his money for him. “When it comes to investment, I’m a bit in the dark. I follow a few groups for advice, but I am wondering what to do with the money we accumulated," he says. "Should I buy another apartment in France, and pay taxes on the monthly income it generates? Most of the options I found here [for investment] are not very exiting, and there are a lot of financial advisors who will make you sign a 25-year contract that seem very shady.” Mr Bonsaudo’s lack of confidence in financial advisers is not unusual among the UAE’s expats. According to a study released in March by the CFA Institute, a global association of investment professionals, <a href="https://www.thenational.ae/business/money/less-than-a-third-of-uae-investors-trust-their-financial-advisers-cfa-survey-shows-1.716436">54 per cent of UAE investors said they employ the services of an adviser yet only 32 per cent assume they are reliable</a>. Andrew Hallam, the author of <em>Millionaire Expat: How to Build Wealth Living Overseas</em>, says UAE residents face "an unusual challenge" that their home-country peers do not “The majority of (financial advisory) firms in the region prolifically sell savings schemes that are so laden with hidden fees, investors stand little chance beating inflation over a period of 10 years or longer,” he says. “Such products provide huge commissions to those who sell them – a commission structure that isn't legal in more regulated environments such as Canada, the US, Australia and the UK. That's why many people are nervous." <strong>_____</strong> <strong>Read more:</strong> <strong><a href="https://www.thenational.ae/business/money/finance-guru-andrew-hallam-s-new-guide-for-expats-wanting-to-become-wealthy-1.695214">Finance guru Andrew Hallam’s new guide for expats wanting to become wealthy</a></strong> <strong><a href="https://www.thenational.ae/business/money/the-mission-to-improve-ethics-among-uae-financial-advisory-firms-1.726635">The mission to improve ethics among UAE financial advisory firms</a></strong> <strong><a href="https://www.thenational.ae/business/money/less-than-a-third-of-uae-investors-trust-their-financial-advisers-cfa-survey-shows-1.716436">Less than a third of UAE investors trust their financial advisers, CFA survey shows</a></strong> <strong>_____</strong> In response to a high number of complaints over expensive fixed-term investment plans, the UAE Insurance Authority and the Central Bank of the UAE both issued circulars last year outlining changes to the way savings and investment schemes are sold, such as capping commission and banning advice fees and trailing commission fees on products sold. The final form regulations are yet to be issued, but Mr Hallam claims investors are now catching on to this “almost unrivalled level of financial exploitation.” Mr Bonsaudo claims the only investment opportunities he has found worthy of the risk are mainly for people who can invest over 250,000 euros (Dh1.09m) in cash with private banks. “Some even have a minimum ticket of one million euros,” he says. But Mr Cronin claims you don’t have to be super-wealthy to gain financial confidence. “In fact, high earning power usually leads to over-confidence and over-spending,” he warns. “There are many extremely rich people living here and equally many people who appear rich but are just living off credit card debt. Then they wonder why they have no savings. With a clear budget and approach to investing your savings, you can create a large savings cushion in ten years on almost any salary." Despite financial uncertainty, only one in four of those polled by yallacompare say they are more likely to leave the country as a result of their financial health and 42 per cent are less likely to leave the country for the same reason. This indicates that while confidence may be falling, UAE expats remain more confident about their prospects in the UAE than in their home countries. Mr Phan's worst-case scenario, for example, did not pan out as expected. “We have been under budget every month so far (this year), thus putting extra into our investments. As a result, our savings rate has actually increased, so I’m feeling more confident," he says. "Planning for the worst meant that I was less likely to get a nasty surprise and fortunately, things often pan out better than you expect them to.” <strong>_______</strong> <strong>Read more: </strong> <strong><a href="https://www.thenational.ae/business/money/uae-banks-federation-issues-financial-literacy-handbook-to-reduce-chronic-indebtedness-1.726418">UAE Banks Federation issues financial literacy handbook to reduce chronic indebtedness</a></strong> <strong><a href="https://www.thenational.ae/uae/uae-s-good-old-expat-packages-fade-away-as-companies-target-younger-professionals-1.727328">UAE's 'good old expat packages' fade away as companies target younger professionals</a></strong> <strong>_______</strong> Andrew Hallam, author of <em>Millionaire Expat: How to Build Wealth Living Overseas</em>, on how to build financial confidence <strong>How can investors feel confident when the global stock markets are so volatile?</strong> The stock market always looks rocky. If I put you in a random time machine, you would say the same thing every month of every year. But that would be a short-term vision. If we think of a long-term commitment to the stock market, the picture is very profitable indeed. <strong>How can investors reduce risk, to build up confidence in their portfolio?</strong> Diversify your investment across every geographic sector. Include a short-term or broad government bond market index. Rebalance your portfolio once a year, and keep investment fees low. <strong>How can I pick a financial adviser I feel confident in?</strong> There are plenty of certification levels that allow sales reps to sell financial products. But readers should demand the most stringent qualification. This is important, because most of the others (as impressive as they might look) are just low-level qualifications allowing these people to sell financial products. Investors should seek a certified financial planner or a chartered financial planner. <strong>Anything else?</strong> Here's the second acid test. If investors are being sold a structured savings scheme, they need to ask this question: Theoretically, could I sell everything after just one year and receive all of my money back? If the answer is no, investors should run. If the answer is, "Yes, you can sell anytime without a penalty," get it in writing. <strong>For those that want to go it alone and invest in a low-cost portfolio of index funds, what would you suggest?</strong> You don’t have to go it alone, you could try a hybrid option and hire PlanVision's Mark Zoril. He charges $96 a year to act as an investment coach. He shows investors how to build a low-cost, diversified portfolio of index funds. He'll do a screen share concept to show investors how to make their purchases. And, for that same $96 a year, he's available to answer investment-related questions for DIY investors.