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If you are someone living, supposedly living in the UAE, who is having trouble when it comes to financial management, here are some keys to help you improve your spending habits.
In a situation when you are faced with a spending decision, especially if it is a large purchase, you should not assume that you can afford it. Instead, you should confirm that you can actually afford the purchase and that you have not committed the funds to some other expense.
This ensures that you use your budget and your balance in the accounts to decide if you can afford to invest in any purchase.
You should always remember before deciding to invest in any purchase, that just because the money is there does not mean you can go ahead with the purchase. You also need to consider the outstanding expenses you ought to pay.
Here is how you can manage your money better:
Many of us put off the task of preparing a budget only because we think it is a boring process that requires listing out our expenses, adding the numbers up, and assuring that everything adds up.
For instance, you are not good with money, you should not have any space for excuses when it comes to budgeting. If getting your spending on the right path requires just a few hours of budgeting, then why not go for it?
You should move your focus to the value that a financial budget can add to your life instead of thinking about the effort involved creating one.
Preparing a financial budget is a complete waste if you are going to let it relax in the corner on the shelf. You should revisit your budget every now and then, in order to get guidance for your spending.
Your budget should also be updated on a regular basis as you pay bills and clear your other monthly expenses.
On any day of the month, you should be well aware of the money that you can spend as per your budget, after taking into consideration any outstanding expenses that are due for the month.
An important aspect of your budget is the income that you are left with after adjusting your expenses. If you are left with any income after clearing your dues, you can use it for leisure activities, however only up to a certain amount.
You should not let yourself entirely free, especially if you have an entire month left ahead of you.
Before you invest in any big purchases, you should make sure the budget you are exhausting on the purchase does not clash with any other expense.
The small spendings here and there accumulate quickly, and before you realize, you are in a situation where you have overspent your monthly budget.
You should make it a habit to track your expenses so that you can find places where you are overspending without knowing.
For instance, you can start a journal in order to track your spendings by categorizing them properly. You can then identify the problem areas and keep them in check.
Your income and credit score may help you qualify for investment in UAE such as a loan. However, this does not mean that you should take on the loan.
There is a myth prevailing amongst people that the bank or the loan provider would not approve them for the loan if they are unable to afford it. However, the provider is only aware of your income and any existing debt obligations you may have, and not any other obligations that could be a hurdle when it comes to timely honoring your monthly payments.
It is on you to decide if you can afford a monthly payment considering your income and other monthly expenses and obligations.
When you take time and put off your big purchases, you actually give yourself time to evaluate whether the purchase is necessary.
Rather than compromising on your other financial obligations, or putting the expense on your credit card, you should save for the big purchases. In this manner, you will save yourself the trouble of dealing with the consequences of missing bill payments or paying interest on the purchase.
If you are someone who has a habit to splurge, a credit card can end up being your worst enemy. In most cases, if you run out of cash, you will turn to your credit card without considering whether you can actually afford the purchase. One should have control over the spendings on the credit card, especially if the purchase can be avoided.
Putting money into a savings account can help you to build a healthy financial habit. It is a good option to set up the automatic transfer facility where a particular amount can be automatically put towards your savings from your account. This helps you in case you forget to do the same.
Even though it does not sound that important, comparing your shopping requirements can help to ensure that you pay the lowest price for the desired products and services. You should keep a lookout for the discounts, voucher codes, and cheaper alternatives to your purchase if available.
When you start your journey towards a healthy financial life, you may take time to get used to preparing a detailed budget, tracking and following it. The more you make this a part of your everyday life, the easier it gets to manage your finances.