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How to Manage Finances When You Have Dependents?

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  | Published: 15 February 2020 | Last Updated On: 19 January 2021

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When one has the responsibility of dependents such as children or parents, investments and savings become a faraway dream. However, there are some tips and tricks that you can follow in order to invest and save within a limited set budget.

It is the ideal scenario to want to take the best care of your parents and your children. After all, grandparents do their bit in taking care of their grandchildren in the best way possible. However, more than often, between managing children and parents, the expenses tend to get a little out of control. But if you manage to follow a few steps or rules, you will be able to keep everyone in your family content and happy, while making sure you are fair to your pocket as well. After all, it is extremely important to have proper finance management in UAE in order to ensure a stress-free and smooth life.

Set Up a Budget

When you are in a situation where you are facing the fear of your expenses falling out of hand, the first step to take is to prepare a budget. The budget differs depending on one’s income, liabilities, and lifestyle. However, the keys and steps to forming a budget are the same for all.

The Mode of Budgeting

You should decide the mode you want to choose for making a budget. You can use the ancient method that involves you using your pen and notebook. However, the drawback of using this method is that it involves a lot of manual work, from calculating total expenses to tracking the category that you spend the most on, everything needs to be done manually.

The alternative to this is using the spreadsheet, where you can form columns for your expenses and income. It also allows you to form charts of your spending categories.

If you want to opt for a method that is more sophisticated, online software is another available option.   There are many options online that can be accessed without any additional cost. They offer you charts and categories to track where you are spending most of your income. There are also multiple mobile apps available in the market, that helps in tracking your expenses. You can also opt for an app that can be accessed online using your computer so that you can easily track the categories that are using up your spending.

Tracking your spending areas and studying them is extremely important for budgeted finance management in UAE.

Creating a Budget

First and foremost, to create a successful financial budget, you need to have your financial goals in place. There can be different goals for different people. Someone may want to save up for a child’s further education, whereas, someone may want to buy a house by a particular age. What is important is to have a financial goal otherwise you can never save enough.

You should categorize your goals into short and long term goals, and prioritize them as per your needs. For instance, buying a house may be more important than taking your dream vacation. Prioritizing your goals helps in saving for the right milestones at the right time.

Then, you should move on to listing your income and all your expenses and categorize them. For example, for your expenses, you can form categories such as loans, utilities, investments, leisure activities, etc. You should then move forward to allot a specific budget for these categories. This helps in controlling the urge to purchase a product impulsively. It also helps in evaluating if you are exceeding the limit you have allotted for a specific category. This helps in proper finance management in UAE.

Sticking to the Budget

The most difficult part of having a budget is sticking to it. Once you have formed your budget, it is essential to ensure that you stick to it, no matter what happens. You should at all costs avoid diverting your income towards something that is unnecessary. For instance, someone may feel the urge to skip the investment for the month and use those funds for entertainment activities such as going for movies and dinners. This is a situation that should be avoided completely.

You should store your bills for any cash payments you make and open your bank records and then tally it with your budget to make sure that all expenses have been accounted for. If you are someone who cannot keep a track of those bills, you should avoid making cash spends and use a debit card wherever possible. You should also try to dedicate a particular amount to your savings from your income at the beginning of the month so that you do not have the capacity to spend it on any other expenses.

Start Those Money Talks

Usually, in the family, the funds that are handed out to parents or children are never tracked.  You should aim to sit down with your entire family at least once a month and have a talk dedicated to your funds and expenses. You should explain your financial situation to your family members every month and what can be rectified, if there is anything that is not going right. You should also aim to teach your little ones the art of saving from their early days. These family money talks help in reducing any unwanted expenses as everyone is updated and on track.

This thread states some of the steps that can be taken for proper finance management in UAE. One key rule to remember is that if you are thinking about money constantly, there is scope for rectification in your finances. Also, investments and savings should be prioritized before making any other avoidable expenses.