5 Must-Haves in Your Personal Finance Checklist in the UAE
Are you one of those people who make financial resolutions at the starting of every New Year but unfortunately you lose your interest mid-way? Or it may be difficult for you to manage your personal finances since you are spending more than you earn? If yes, then fret not. Because you are not the only one who is going through such a situation as there are many people who find it difficult to manage their personal finance in UAE.
It is true many of us aspire to be better personal finance mangers as we grow older, but it is easier said than done. Well, you can sit down and penned down the things that will help you to manage your personal finance and get back them on the right path, but how much sure you are that your personal finance checklist is correct and it will work in your favor?
Well, everyone’s personal needs and financial requirements are different from each other so there is no one size fits all checklist that will work for all people. However, there are certain things that are must-haves if you want to take your personal finance on the right track. Here are those 5 things that you must include:
1. The Ratio of Saved Vs Spent
You must always spend less than what you earn in order to manage your personal finance. It may sound like a very basic thing, but there are a host of millennials who is unable to stop spending on lifestyle and accumulate credit card outstanding debt because of their impulsive spendthrift nature. That is why we are giving you one simple tip that can help you to track the ratio of your spending and saved money.
At every month’s end, you just need to calculate that how much of your monthly income has been used in meeting your day-to-day expenses and how much of your income has been saved for meeting your savings goals. Doing this will certainly help you analyze if you begin going overboard with your monthly spending.
2. Check the Cash Flow
This is one of the crucial aspects of financial planning that usually ignored by most of people. But, no wonder it is quite easy to imply. In order to start working towards this plan, you just need to ask yourself that where does all my income go? Your answer will definitely help you analyze your cash flow.
For example, you have three bank accounts. One account is your salary account, the second one is the savings account and the third one is for your investment or travel goals.
Your very first step towards generating a cash flow can be by labeling all these three accounts. By just giving them a specific name, you will easily be able to create a structure and organizing in the way you manage your money. In simple words, you will know that your money is going where without checking your detailed bank statements each month.
3. EMI Calculations
When it comes to your monthly expenses, there are basically 2 types. The first one is the money that you spend to meet your lifestyle needs such as food, travel, entertainment, bills, etc. Well, all such expenses can be categorized as your living expenses.
Well, another type of monthly expenses are debt repayments or investment such as credit cards bills, home loan monthly installments, personal loan EMIs, car loan, etc. This second category can be considered as credit expenses or in other cases, investment expenses. Therefore, it is imperative that you must track your living expenses and credit or investment expenses separately each month. This will definitely give you the idea that how much creditworthy individuals you’re.
4. Wants Vs Needs? Check
If you really want to manage your personal finance in UAE and get them back on the right track then you will need to prioritize your needs before your wants. However, segregating things that what qualifies as a need and what qualifies as want is quite subjective at particular times, there are certain universal requirements or needs that outweigh other needs.
For example, expenses, like purchasing a new car for comminuting or paying bills for fast internet connection, can be classified as your needs in today’s fast-paced world. While on the other hand, purchasing a very expensive watch or a pair of shoes that have blown your mind away when you saw it on your favorite e-commerce website is classified as you want. So, always classified your wants and needs in order to manage your personal finances in a hurdle-free manner.
5. Set Practically Possible Savings Goals
It is very easy to say that you have finally decided to save some amount of money from now onwards. But it is quite difficult to following up with your saving plan especially if you do not track your progress. Rather than fixing your annual savings goals just spilt them up so that you can at least track your financial growth easily. It can be monthly, quarterly, half-yearly, but do not forget to set periodic savings goals as a part of your personal finance checklist. Not only it will increase your savings but also boost your motivation that you are financially secure and you will be to meet your emergency expenses if any of them come your way.
You need to keep all these aforementioned 5 points in mind to manage your personal finance in UAE. These basic steps are easy to follow so everyone can easily make a part of their personal finance checklist without going the extra mile.