There are few experiences as thrilling as receiving your first every pay cheque. From being dependent on your parents for your every need, you now enter a world of financial independence where you are free to spend your money as you please.
Are you wondering how to manage your salary more efficiently? We’ve got some great tips for you to follow:
#1 Set a spending budget and stick to it.
Since you are drawing a salary for the first time, you will be tempted to splurge on everything at once. Here’s our sincere advice – don’t. The money habits you set for yourself at this time will set the stage for how you handle a larger income, future debt (when you buy a house or car), investments, children’s education costs, etc. When handling an income for the first time, less is always more, and this certainly describes your spending habits. Set a monthly budget to account for fuel, eating out, occasional shopping, etc. Stick to the budget strictly and do not overstep it for any reason.
#2 Get a credit card with a low limit.
You are eligible for a credit card in Dubai and UAE when you have a regular income. However, your monthly income determines the type of credit card you get from the bank. Check your eligibility for the credit card by entering your income and other personal details on the bank’s website – the bank then shows you which card you can apply for. Set a low credit limit on the credit card so that you automatically spend less on it.
#3 Buy insurance.
You might think that there are no dependents on your income, and there may not be – yet. But you will have a family in the future, a house to buy, children’s education to pay for, and several other expenses. Your income may have increased in a few years, but there will be more demands on it. Your family will depend on your income increasingly, and the best way to safeguard them is to buy life and health insurance. These are mandatory in the UAE, so do make sure that you buy adequate coverage without burning a hole in your pocket.
#4 Make a roadmap for the next five years.
Deft planning and discipline lead to future financial success – any wealthy person will tell you that. But this starts with creating a roadmap that lists all the goals you wish to achieve in 10 years. Start by listing down all the things you want to have in five years, and start working backwards from there. Achieving these goals will entail increasing your savings, making investments, using your credit card and money judiciously, buying insurance, etc. Take the help of a financial planner to get more clarity on your roadmap and how to realistically achieve your goals in the given time frame.
#5 Don’t get into any debt.
Debt is sometimes inevitable, such as when you take a loan to buy a house or a car. But this is institutional debt that you can repay from your income quite easily. We recommend steering clear of borrowing personal loans or loans against insurance or credit cards. Any loan with a high rate of interest can eat into your income rapidly and make it difficult to run monthly expenses. It is better to liquidate investments and dip into savings when you need money, instead of incurring debt for a short term need.
We hope the above tips help you manage your money smartly and set out on the journey towards financial success in the future.