Tuesday, October 20, 2020

How To Save Money in Dubai: Best Tips and Tricks

As human beings, we all have a tendency to consume. In a consumer’s paradise like the UAE, and especially in the city of Dubai, that tendency is magnified even more. One glance at the city’s fancy shopping destinations will make you salivate. Oh and in case you are a parent, congratulations on adding the outrageous […]

As human beings, we all have a tendency to consume. In a consumer’s paradise like the UAE, and especially in the city of Dubai, that tendency is magnified even more. One glance at the city’s fancy shopping destinations will make you salivate. Oh and in case you are a parent, congratulations on adding the outrageous school fees to your list of expenses as well. So already we don’t have much to save and therefore the little that we do, we find ourselves spending mindlessly at the various magnificent malls that we can’t seem to get enough of.

Advertisements give us all the more reason to upgrade and as a result, we constantly want the newest , fanciest, biggest and priciest items available. However, we shouldn’t give in to our impulses in this case and look for ways to save money in Dubai. If you are looking for those ways, this post is going to be extremely helpful for you.

Here’s how to save money in Dubai:

Start now

Whether you start big or small, it doesn’t really matter – as long as you start. If saving 10 percent seems a little difficult right now, start with as little as five percent. 95% of your income should be enough to sustain you. Save consistently, even before you pay your monthly bills and debts. Find a way to gradually increase your savings rate to 6 per cent, 7 per cent, 10 per cent, if not more. Ideally, you must try and invest 15 to 20 percent of your savings in an investment fund. What’s important is that you start now, and get into the habit of saving and investing.

Pay yourself first

As soon as you’re paid, split the cash and put yourself on top of the queue. By paying yourself first, you get the satisfaction of saving something for a time period (or your retirement). If your salary gets deposited monthly into your checking account, put a specific amount of that into a separate account which you won’t use for weekly groceries or personal expenses. You can do a split; say 50/50, 60/40, 70/30, 80/20 per cent for expenses/savings, whichever suits you best. What’s important is that you set a personal target and stick to it without fail.

Maintain two bank accounts

Have one account for your expenses and have another one for your savings. It’s a simple solution, and it’s rather helpful. Splitting the two allows you to keep tabs on your money better. This allows you not only to physically put your money in two places, but know the amount of money you have spent and saved up. Ideally, you ought to have more in your savings than in your travel and entertainment account.

Let your money work for you

If you skip on a cup of cappuccino every day, you will end up with about Dh370 in a month. You can invest that sum into a mutual fund with the help of an SIP (Systematic Investment Plan). This investment can help you earn 8 per cent to 10 per cent per annum, you will be financially independent, with savings of AED 3.7 million ($1 million) by the time you retire. Even someone who earns an average salary has the potential of becoming a millionaire if he or she consistently saves over the course of his/her lifetime. Spend some time and effort in learning how mutual funds, trust funds, exchange traded funds and other forms of investment work. Find out about the best ways to spend your money in the UAE.

Track your finances

Use a banking app on your phone (if it’s available) where you get a quick view of your money, keep tabs of your balances, check your transaction history and transfer money in between accounts. You can also maintain a spreadsheet on Microsoft Excel or Google Sheets. Or you can go old school and write it in a book. What’s important is to keep track of how much is going in and going out. Keep track of how much goes where. This allows you to see if you’re overspending, so you can cut back on things and save money.

Keep the change

Whether you want to use a box, a can or a penny bank, saving loose change is a tremendous method to earn some extra cash. Your 25 or 50 fils or Dh1 coins can seem insignificant at first, but if you round them up later, you’ll easily find yourself with a couple of hundred dirhams before you know it. You can then use it to buy something you’ve been wanting for yourself or add it to your investment kitty.

Don’t keep cash in your wallet

This practice guards against impulsive shopping, especially from stores that also take cash-only payments. If you check out your wallet and know there’s money there, your instinct will tell you to spend it. So if you end up with no cash inside a cash only store, it cuts your impulse to spend. You can’t spend what you don’t have.

Don’t convert currencies

Converting everything you purchase or want to shop for into your home currency is silly. We’re not earning in pounds or dollars, so we shouldn’t be thinking in those currencies. Besides, different countries have different prices won which are based on various economic factors. It’s a mistake that many expats make.

Don’t buy the costliest car that you can buy

With easy instalment plans and petrol being so cheap, walking into the 4×4 trap is not uncommon. But the amount of money you’ll find yourself paying in monthly instalments for a 4×4 compared to a daily car can add up to a difference of about Dh1,000. And let’s not forget, expensive cars are also very expensive to maintain.

Avoid the road tolls

While getting a Salik tag isn’t very expensive and provides you the choice of using Shaikh Zayed Road when necessary, you’ll avoid using it all the time.

Avoid overspending on food

Food is a necessity, but there’s no need to splurge. People tend to shop for an excessive amount of food, stocking their fridge with food that eventually goes straight into the trash.. Saving money on food is as easy as preparing your meals yourself, rather than buying lunch at work.

Don’t waste food

If you have ended up buying too much food, don’t throw it away. Improvise. Do what all the Nan’s in the world do… make a pickle. It’ll save you an expense on a day when you’re planning to have some friends over. You don’t have to rush out to Spinneys to buy some overpriced snacks. Slap some of that pickle on crackers and you’re sorted.

Buy quality products

Saving doesn’t mean not buying anything at all. When you do buy, choose quality over quantity. When you have a family, buy a top quality couch that might stand the onslaughts of growing children. Invest over a nice bed, because you’ll spend a 3rd of your life on the bed itself. Buy quality because it actually helps you with your financial burden in the future. It’s the same as buying a very cheap used car. The money you save on the price, will end up being spent on the everlasting repairs.

Achieve targets and reward yourself

Even an occasional dinner at a pleasant place to mark a milestone in your savings plan can prove to be helpful. When you do meet your target, buy yourself something you’ve wanted for a short time. Having something that easily motivates you helps you stay focused on your goal.

Avoid borrowing money

Avoid spending money that isn’t yours. Unless absolutely necessary, avoid borrowing money from friends and family. Owing money isn’t worth buying that thing you would like. As far as possible, stand back from credit card debt, as they can rise up to almost 36 per cent a year. If you need to borrow at all, then apply for a personal loan, which in general charges much less than a credit card. Borrowing causes stress, and stress should be avoided wherever possible.

Shop around

Before buying something you would like, go searching for a far better price, especially for food, clothes, shoes, cars, and insurance. Just because the supermarket closest to your house is the most convenient, it doesn’t mean that it sells the most cost effective goods. Shopping tends to often be extremely therapeutic and enjoyable, so rather than going about it mindlessly, shop with some knowledge.

Pin it up

Developing a lifelong habit of saving and investing isn’t easy. It requires will-power and determination. Write down your goal and pin it up so you’re constantly reminded of it. However, once you make this a habit, your financial well being almost becomes assured.

Cut down spending on special occasions

Buying presents is great, but don’t overdo it. Gifts that are well thought out are more appreciated than mindless ones picked on a trip to the mall. Keep your spending down on special occasions – birthdays, anniversaries and holidays like Christmas. It’s always the thought that counts, not the price.

Avoid Credit cards

Credit cards can either be your worst enemy or your best friend. But more often than not, they’re your worst enemy. They give you a false sense of security and permit you to spend money you don’t even have so it’s best to avoid them. Credit cards even have the very best interest rates out of any borrowing mechanism from a bank. Live within your means and spend only what you’ve got.

Pay your credit cards first

If you are spending some money through a credit card then ensure that you always pay off the credit card bills quickly. If you maintain a zero balance, you avoid coughing up to 3 per cent ‘finance charges’ per month, ‘credit shield’ and all other pointless charges. Doing so would allow you to save thousands of Dirhams each year.

Build an emergency fund

An emergency fund is helpful in case of unexpected misfortune – job loss, accident, death in the family. The rule of thumb here is to save at least three months of your salary as an emergency fund and within easy reach.

Stay away from impulse purchases

If you fancy something which you don’t really need, wait at least 24 hours before buying it. Chances are you will realise you don’t actually want it. If you’re keen on shopping, ignore shopping malls for a short time – or altogether — because window shopping at malls often turns into actual shopping. Don’t allow yourself to be tempted.

Save on utilities

Turn off appliances once they aren’t in use, switch to energy-saving lights and switch off the air con once you leave the house. Even by placing a water-filled plastic bottle inside an average-size toilet flush tank to displace extra water will end in many litres of water being saved monthly. Don’t let the water run while brushing your teeth, use a glass instead. Avoid taking extended showers or baths. All these add up quickly.

Be realistic, even after a massive salary hike

Don’t let a salary hike give you an excuse to upgrade or spike your expenses. Don’t ditch your small sedan for a Range Rover simply because a neighbour drives one. Don’t enter a nicer, bigger villa simply because your friend lives in one.

Keep an eye out for discounts

Take advantage of loyalty programmes that allow you to save lots of points. These days most shops have loyalty cards so check in with hypermarket loyalty programmes that convert your points into cash. 

Ensure that your cheques don’t bounce

A bounced cheque in UAE is a criminal offence. In case you use cheques to make a majority of your transactions, ensure that they never bounce. A bounced cheque won’t just attract penalties from the bank, it will also put you in some serious legal trouble.

Saving money is definitely important for financial security, you shouldn’t just save your money and let it stagnate. Get in touch with a financial advisor from Wealthface to know about the best ways to make your savings grow.

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Wealthface is a one-stop online investment company that services all kinds of investors. It provides affordable high-quality investment products and services, tailored to each type of investor, and delivered at a low cost in a fully transparent manner. The company plays the role of a Fiduciary investment advisor, which means it always puts the client’s interest first.

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2 comments

  1. Avatar
    Yiga Abdallah 6 months ago

    Thanks for the good knowledge you feed us with

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  2. Avatar
    bilal 5 months ago

    nice interesting article

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