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Savings Plan

Saving money today can reap rewards in the future. Life is unpredictable, but there are ways to ensure you're financially equipped to overcome any obstacles that come your way. Here are some tips to help you plan for a secure financial future.

We all like to enjoy the fruits of our labour, and it's easy to indulge in unnecessary spending. However, problems can arise when we fail to plan and save enough for the future. Given life's uncertainty, it's essential to avoid living paycheck to paycheck. Job loss, pay cuts, health issues, economic downturns, and inflation are just a few examples of unforeseen events that can impact our financial stability. The recent pandemic has taught us the bitter taste of ambiguity as it disrupted our personal and professional lives.

Our experiences - the good, the bad, and the ugly - have made us realise the importance of preparing for the future. Strategizing and planning for the future using our current income is one of the smartest financial decisions we can make with our hard-earned money.

If you're wondering how to start planning, here are some suggestions:

 

Stay mindful of your finances

To save money, it's essential to understand your cash flow. This means keeping track of your incoming and outgoing revenue streams, including debt repayments, monthly bills, school fees, subscriptions, etc. You can use Excel or a ledger to maintain your records, and many apps are available online to support you with this.

Here are some tips to help you stay mindful of your finances:

  • Track all your sources of income over a 30-day period.
  • Keep track of your fixed and variable costs. Fixed costs include rent, school fees, and utility bills, while variable costs include expenses like groceries, entertainment, subscriptions, etc.
  • Identify any variable costs that you can cut back on to increase your savings pool. For example, unused subscriptions.
  • By the end of the month, assess whether you're able to save or if you're spending beyond your means.
  • Regularly assess your progress and make adjustments if necessary. Budgeting apps can help you stick to your budget and achieve your savings goals.

 

Stay out of debt

To initiate savings, it's crucial to stay out of debt. If you've been defaulting on your debts, you need to get on track with payments, as non-payment will only add interest fees and eventually lead to legal action. As the interest accrues, it wipes out any savings you manage to stack up.

Consider using the 50/30/20 budgeting method to get rid of debt quickly:

  • Use 50% of your income on your needs, such as rent and utility bills.
  • Use 30% of your income on your wants, such as dining out, shopping, and subscription services.
  • Save 20% of your income. For example, if you make AED 2,500 a month, set aside AED 500 a month. In just a year, you will have saved AED 6,000.

 

Open a savings account with the intention to save

To ensure that you save a portion of your income, separating it from your spending money is essential. Consider opening a savings account and transferring a fixed amount of money each month before you start spending. Keep the fund separate and out of easy reach to minimise the temptation to withdraw your savings. This will help you avoid using your savings to cover daily expenses, especially variable costs like dining out and entertainment. You can also explore saving plans like Lifetime Pro and Accelerator Pro, available on our website.

Learn more

 

Automate your savings

To make saving even more manageable, set up an automated transfer from your current or savings account on a specific date each month, preferably the day after you receive your salary. Automating your savings will reduce the chance of using these funds for daily expenses and help you save more consistently.

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