Living in the UAE, we often get side-lined by our lifestyle choices when planning our finances. The temptations are so many: from shopping, to eating out to travel – there certainly is no shortage of things that we could buy or spend money on. And if you have a family, you could find yourself focusing all your energy on providing for them and addressing their daily needs –all the while neglecting to teach them the importance of saving.

UAE residents concerned with the rising rent and utility bills

UAE residents are aware of this issue according to a recent survey by the 2014 Savings Index from the National Bonds Corporation. The survey which was published on The National newspaper last December, found that four in five UAE residents are worried their savings will not meet their future financial needs. Interestingly, the study showed that the primary reason behind residents’ concern is that they have had to take on more debt due to rising house rents and utility bills.

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Are we preparing our children for their financial security?

The primary reasons for saving up for most residents are financial stability, children’s education and emergencies. While we are concerned about providing for our children, are we preparing them to stand on their own feet and be able to comfortably provide for the generation after that?
The question is up for debate. While our grandparents’ generation may have repeatedly echoed the need to “save a penny today, for a rainy day,” the rising cost of living and the temptations of shopping, travelling and dining out potentially is making it hard to follow on the previous generation. As the UAE does not have pension schemes for expatriates, there is a real need for them to put in place a retirement plan. How much of this culture can we pass on to our kids and how do we do so? Some would suggest to start by giving them a savings tin from a young age and give them a coin or two as a reward. With the money they collected, they can then buy something special. Other suggestions would be around having them do small house jobs in return for some notes. This helps them understand that work brings financial reward.

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How can I help my children to save?

When your children are very young, consider setting up a savings account for them, that they can deposit cash into at regular intervals. Explain to them how these quantities, however small today, could sum up to significant amounts of cash that they can use towards their education or even toward a down payment for their very first home. If you are an expat and have not got your retirement funds set up yet, you may want to think about investing in a savings or a long-term investment plan yourself.

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Several banks in the UAE offer savings investment plans that are designed for long term financial planning. Minimum investment amounts can be as low as AED1,000. Your money is invested in various funds depending on your chosen risk profile. For example, you could choose a conservative investment plan that would generate a stable and fairly predictable return. Or, an aggressive investment plan would generally result in higher return potential, but is more volatile. If you simply don’t have the appetite for investment risks, you could choose a savings account that generates an annual return depending on the balance you maintain. Rates on savings accounts in the UAE range from 0.05% to 4%.

It’s never too late to start teaching you children to save. Get them into the habit of controlling their expenditure so that they are more conscious of their financial behaviour