International workers risking their financial future by not saving during their time as an expat, say experts at Guardian Wealth Management
Expatriates jeopardising as much as Dhs330,500 in savings over five years
A lack of savings, poor financial discipline and no long-term plans are among the biggest worries facing expatriates in the UAE, according to the wealth management experts.
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Despite earning higher salaries than they would back home and not paying income tax, many people struggle to put away money each month or simply neglect the need for savings all together. In fact, experts at Guardian Wealth Management estimate that individuals could be jeopardising as much as Dhs330,500 (calculated based on saving Dhs5,000 per month with a 5% return) in savings over five years, which is the average length of time an expat stays in the UAE.
It is often only after a major change in circumstances, such as the loss of a job or making the decision to relocate, that expats realise the impact years of bad financial planning can have on the rest of their life.
“Living and working in the UAE allows people to live a certain lifestyle and unfortunately savings can often be forgotten about,” says Gemma Frankland, Head of Global Partners at Guardian Wealth Management.
“Although there can be a lot of demands on your salary, from school fees, car payments etc, it is important to plan for the future.
Ideal time to start saving
“If you are here on a fixed-term contract, or only plan on staying for a few years before returning home, possibly to a lower salary, it is important to use your time in the UAE to save as much as you can for the future by putting money into a suitable savings plan.”
It doesn’t matter how long you have lived in the UAE or how old you are, financial advisers at Guardian Wealth Management, say is important to start saving as soon as possible and to get into the habit of balancing your monthly budget.
“The earlier people start saving the better. For your long-term goals such as retirement, you should try to put away 20-30 per cent of your monthly salary,” says Gemma.
“If you do that from a young age you’ll be in a great position. However, most people do not, and they tend to be in their 30 or 40s before they start saving seriously.”
“You can begin by putting away as little as $200 per month. Also, apportioning any pay rise into your savings is a great way to boost your finances instead of simply increasing your expenses.”
Companies like Guardian offer full lifestyle financial planning to clients to not only save sensibly but also budget properly so they can fully enjoy life here.
“Everyone has different targets, be they saving for a house, to pay school fees or for life in retirement,” says Gemma.
“We break each client’s needs down into the short, medium and long-term and create solutions varying from a one-pot solution you can dip into as you go along, or something that can be added to and grow over time.
“We work with our clients to get a picture of their overall goals – where they are looking to retire, what kind of lifestyle they want, what we need to do to plan for taxes etc, and then work out how much they need to save. Everything we do is completely portable and designed for expats.
“Flexible saving plans allow clients to start and stop at their convenience. These are useful for people who have managed to accumulate some savings but aren’t necessarily sure what to do with them.”
As with any kind of financial planning, setting out a budget and a target to reach, and then being disciplined to stick to it, is key.
However, getting into the habit of saving is essential in order give you a good foundation to achieve your financial goals.
Guardian Wealth Management offers tailored financial planning for families including budgeting, short-term savings and long-term structured savings and investments.