Proven ways to save money in UAE 2024

How to Save Money in the UAE?

Saving money in the UAE, while essential for emergencies, also equips you to manage large investments in UAE that may arise in the future. And while there are several ways to save money in the UAE, you can select the most suitable saving option as per your needs and financial planning. Following are some of the proven ways to save money in the UAE. 

Start a Savings Plan

Your stay in the UAE can prove to be expensive without proper management of finances. If you have some big purchases lined up, you need to possess adequate savings. If you have a savings account with banks or financial institutions, you can accrue a considerable amount over the period and use it for any approaching expenses. Banks in the UAE offer anywhere between 0.5% to 3% interest rates. Moreover, you can also pick out a deposit scheme like a fixed deposit or recurring deposit that offers higher interest rates compared to savings accounts. 

However, while selecting a bank account, you also need to ensure the amount of return you will eventually receive as the banks also include account opening, minimum deposit, and account closing fees. As per experts, you should ideally have at least 6 months of expenses intact in your bank account to deal with any future financial hardship. 

Plan a Monthly Budget

A monthly budget plan is a prudent money-saving trick as it gives an insight into your total savings and expenses. After figuring out how much you actually save, you can conveniently make plans regarding investing or savings. While planning your monthly budget, you can start by noting the essential expenses like housing rent, bills, transportation, and groceries. This calculation helps you segregate your fixed expenses from the rest of your income, giving you an insight into the amount you can spend on other expenses. An excellent place to start is to keep the 50/30/20 rule in mind, where you should ideally manage such fundamental expenses within 50% of your salary. 

Continuing along the other parts of that rule, you can then estimate the non-essential expenses like dining out, shopping, and hobbies. These expenses should not exceed more than 30% of your monthly earnings. 

Finally, the remaining 20% should be the ideal savings from your income that you can choose to save or invest. Ultimately, such a monthly budget planning helps you discover more opportunities to invest or grow your funds. 

Purchase Groceries and Household Essentials in Bulk  

You can save a significant amount of money every month if you purchase groceries and other household items in bulk. Besides saving your transportation cost, it also eliminates the stress of visiting grocery stores and markets every week.

Wherever you live, cooking yourself is the cheapest option. However, you need to maintain a pantry if you plan to prepare your own food. As per reports, a single meal can cost you AED 120 while dining at restaurants in the UAE, while the same food can cost around AED 80 if ordered online. Still, cooking that meal at home costs only AED 50. As apparent, cooking yourself can help you save considerably every month. 

A convenient way to save your expenses is to buy groceries and household items in bulk from supermarkets like Lulu, Carrefour, Grand Hyper, etc. Alternatively, online grocery purchase, common nowadays, also saves extra bucks. 

Consider Starting an Emergency Fund

Financial emergencies can appear anytime, and you need to prepare for such events in advance. As the cost of living in the UAE is on the expensive side, most financial emergencies can cost you a fortune. Events like job losses, urgent medical care, emergency repairs, etc., can exert a negative impact on your finances and saving plans. 

However, dodging such financial crises is easy if you can manage an emergency fund in the UAE.  

Individuals without emergency funds tend to take loans at high-interest rates, further decreasing their chances of efficient savings. On the other hand, if you follow the general practice of possessing emergency savings of up to 6 months of your living expenses, you will be able to tackle unfortunate financial situations conveniently.  You can maintain emergency funds in a savings account, money market account, or any liquid account for quick fund withdrawal.

Consolidate Your Debts (If Any)

Debts can put you into a cycle of repayments at high-interest rates. If you have active debts, they must be paid off regularly and be closed as early as possible. Similarly, it is easy to fall into credit card debt if you don’t practise responsible spending. With APRs for credit cards going as high as 40%, non-repayments can add to your monthly outstanding and trap you in large debts. 

In the same instance, it is recommended to close your debts responsibly. You should not skip on emergency funds and savings just to pay off your debts. Similarly, while there are various tactics to close your debts, the debt snowballing system is quite effective in managing large debt amounts. However, if you have multiple smaller debts, you can consider consolidating them as it reduces the loan APR (Annual Percentage Rate) and increases the repayment tenure. You may also take a personal loan to consolidate your credit card debts, as the former earlier comes at lower interest rates in comparison to credit card interest rates. 

Consider Your Apartment and Living Expenses

A significant amount of your monthly income goes into living and housing expenses. Renting an apartment or house in the UAE can be expensive. Consequently, those who are living in rented houses should also consider the rent amount they are paying. As per experts, you should not spend more than 30% of your monthly income on your housing rent. 

In case you are spending more, you need to reconsider negotiating your rent or move to an economical place to live. You can apply the same logic to various other large expenditures. To start with, you can begin with the highest expenditure, and move down step by step while negotiating to save more on your monthly expenses. 

Prepare a Diversified Investment Portfolio 

Stock trading and investment platforms often charge high fees for opening, managing, and closing your investment account. You need to research extensively before opening an account with stockbroking firms. Similarly, you should aim for a diversified portfolio as it helps you avoid the risk of losing your money. If you put a large sum in a single type of stock or equity, the chances of losses increase if that stock fails to perform well. Ultimately, the tricks to save money in the UAE depend on how effectively you invest your money.

However, if you invest your funds in smaller chunks in numerous stocks, the chances of incurring losses reduce considerably. You can also attempt to understand the balance of your investments between stocks and National bonds UAE, as this balance can be the best way to save money in the UAE while maximising your profits. 

Find and Use the Shopping Offers and Discounts 

There are several shopping offers and discounts available through Entertainer and Buy1Get1 in the UAE. You can take membership by paying a nominal fee, although you can find these benefits preloaded on your card if you are a credit cardholder. By availing of such offers, you can enjoy discounts and exclusive privileges on shopping, dining, cinemas, recreational and theme parks, etc. 

You can cut on all your lifestyle and shopping expenses by looking actively for offers and discounts that would eventually allow you to save money in the UAE.  Moreover, you can also attend shopping events like GITEX and Dubai Shopping festivals to save additional money on electronics (and explore fantastic gadgets). Similarly, you can keep an eye on outlets and mini-malls that run periodic offers and discounts on various products. 

Request Your Bank to Reduce the Mortgage Interest Rates

Mortgages consume a sizable portion of your monthly income, all while incurring large interest amounts.  If you are looking for ways to save money in the UAE, consider lowering the interest rates of your mortgage. 

As real estate prices are at an all-time low presently, it is the peak time for you as a customer to negotiate interest rates with your bank. If you successfully negotiate your mortgage or consolidate it at lower interest rates, you can save a significant amount of money over time.   

Key Takeaways

• Living in the UAE is expensive and you should follow the money-saving tricks to generate funds over the period. 
• Savings bank accounts and deposit schemes are some of the best ways to save money in the UAE. 
• On a personal level, you can plan monthly expenses and start budgeting to save money in the UAE. 
• If you have a debt or mortgage, pay it off responsibly or choose the option of consolidation to save on interest rates. 
• Search for discounts and offers on shopping and lifestyle expenses to save additional money.