Managing your personal finance is not as difficult as people considered it to be. All they need to follow some good financial habits to get their personal finance on the right track.
So, how good are you when it comes to managing your personal finances? Are you handing your personal finance in UAE well? Do you need further improvements? In this article, we will discuss the 25 best practices that each one of our must follow to sort out your personal finances.
- Budgeting: Majority of the people ignore their spending and hope that things will work out in their favor. But always keep in mind that hope is not a good strategy and you have to work hard for yourself. So, choose a system that works in your favor. Whether it is an app, spreadsheet, or something else, just find a better system in order to track your spending. And ask yourself a few questions. How often do you track your spending? How is your hard-earned money being utilized? And where is all your money going? By asking such important questions to yourself, you will certainly discover your spending. Also, it will be very easy for you to keep a track of every AED going out of your pocket.
- Pay Your Bills In a Timely Manner: Be it your loan monthly installments, credit card bills, utility bill payments, be sure you pay your bills on time every month. By doing so, you cannot only use the left amount for your day-to-day expenses and to meet your savings goals but also you can also boost your credit score by becoming a responsible borrower.
- Keep an Eye on Your Credit Score: Always keep in mind that credit score is one of the most important aspects when it comes to opting for any sort of finances at attractive interest rates. So, clear your outstanding dues always on time to maintain a good credit score. Moreover, you can check your credit score through some authentic websites that offer information free of cost.
- Invest Your Money in Multiple Assets: Well, there are plenty of investment options right from fixed deposits and real estate to mutual funds and gold. So, it is good to have your portfolio diversified in order to avoid financial losses.
- Classify your ‘Wants & Needs”: If you want to manage your personal finance in UAE and you want to get them back on the right track then it is very essential for you to prioritize your needs over your wants. That being said, classified things what qualifies as your needs and what qualifies as your wants. However, it may be subjective at certain times but there are a few necessary needs that outweigh other requirements. For instance, expense like buying a new vehicle for commuting can be classified as your needs. Whereas, buying an expensive pair of shoes that have taken your heart away when you saw them on an e-commerce website is your want that can be ignored if our budget is not allowing you to purchase them. So, make sure you classified your “needs” and “wants” to manage your personal finances in a hassle-free manner.
- Avoid Making Impulsive Shopping: Do not indulge yourself in impulsive buying. One of the great ways to avoid impulsive shopping is to make a shopping list and then stick to it religiously.
- Create Practically Possible Savings Goals: You may have decided plenty of times that you will save some amount of money from now onwards. But following up with the saving plan is quite difficult sometimes especially when you don’t track your progress. So, instead of fixing your yearly savings goals, it is better to split them up so that you can track your financial growth in a hassle-free manner. Well, it can be half-yearly, monthly, or quarterly. Not only this will help you to increase your savings but also your self-confidence will also be boosted by knowing that you are financially stable to meet any of the emergency expenses that can come your way any time in life.
- Pay Your Credit Card Bills in Full Each Month: If there is any month where you have a lot of financial burdens, there are chances that you may comfortable in making only minimum due payment on your credit card. While it is not advisable, carrying a small outstanding debt for one or two months is not going to leave a huge impact. But things get worse when you consistently make minimum due payments on your credit cards and let your remaining outstanding amount compound. Due to this, the rate of interest will increase as well as your credit score will take a hit significantly. So, try to avoid making a minimum due on your credit card as much as you can.
- Avoid the Temptation to Keeping up with the Joneses: Many people tend to become obsessed with the idea of obtaining stuff. But such people really need to learn to be happy with what they have. So, avoid trying to outdo your friends, neighbors or colleagues and just be thankful for the things that you have.
- Maintain an Emergency Fund: You should have between 3 & 6 months of living expenses in your bank account in advance so that you can easily meet your emergency financial needs if any of them come your way.
Some Additional Tips That You Should Follow to Manage Your Personal Finance in UAE
- Invest your hard-earned money for meeting your short-term as well as long-term financial requirements.
- Do not spend more than you earn.
- Try to clear your outstanding debts as early as it is possible.
- Make sure, your research properly before investing your hard-earned money in any assets to make the most of it. However, you can also take the help of a financial advisor if you find it difficult on your own.
- Take a look at your investments at least one time in a year.
- Opt for apt health and life insurance covers.
- Borrow money only when you really need it and you don’t have any other option left. Reason being, too many loans are not good for your overall financial health.
- Do not get fooled by get-rich in just a few days schemes as they are a hoax and they can increase your financial burden badly.
- Utilize your credit card wisely and try to make the 30% credit usage limit always in order to maintain a good credit score.
- Use your credit card to purchase those things only if you are confident that you can make the full payment at the month’s end without taking any financial stress.
- Check your credit card monthly statements for errors, identity theft, or fraud signs.
- Do not forget to compare the products before you buy even financial products. This will certainly help you to find the better deal as per your need a
- s well as budget.
- Plan in advance for the golden years of your life i.e. retirement.
- Do proper research before buying anything. Also, check extended warranties on those items you purchase since some of the items are often a waste of money.
- Go through the fine print carefully. Always be sure you know what you are getting yourself into before signing on the dotted line.
The Bottom Line
So, if you are struggling to manage your personal finance in UAE then just follow the aforementioned 25 tips to keep your finances on the right track.