Sick of making, and breaking, New Year’s resolutions? Bin the battle this year in favour of tweaking the life you already have to make it work better for you. It turns out, a few expert tricks can make you healthier, wealthier and happier, no big sacrifices necessary. 

New year, new financial plans

Make a resolution that matters this year and start managing your money better. IFA Keren Bobker outlines her top tips to making your accounts work for you, no raise required…

Making New Year resolutions might well be popular, but how many of them are about our finances? All too often we think of resolutions in terms of fitness, but what about your financial fitness? For a lot less effort than joining a gym you can get your personal finances in shape for 2018 – and with the introduction of VAT leading to price increases on most goods and services, it’s more important than ever to have a good grip on your spending and financial habits.

Top Tip #1 Budget, budget, budget

I know it sounds boring to set a budget, but it really is a worthwhile exercise, especially if you can’t quite fathom where your money goes each month. You need to list all your household income, all your fixed expenses, and all the other things you know you buy or pay for. Then for a couple of months, at the end of each day, make a note of exactly what you have spent and on what. At the end of the month, tally up the money in and the money out, then take a look at where you can cut back.

Top Tip #2 Give yourself a monthly spending limit

It’s all too easy to hand over a credit or debit card, but having to use cash for day-to-day expenses can emphasise the real price of what you are buying. If you are overspending, try giving yourself a monthly cash allowance – pocket money, if you like – and stick to spending no more than that. You may think twice about breaking a Dhs500 note for items you don’t really need.

Top Tip #3 Shop smart

VAT will be added to everything you buy at a rate of five per cent from the first of this month, so your expenses are going to increase. But the cost of your groceries doesn’t necessarily have to. Prices can vary significantly between supermarkets so that five percent increase could easily be saved by buying the bulk of your groceries at cheaper stores.

  1. Look for special offers and bulk buy the essentials when they’re on promotion.
  2. Look for local and regional items, which are often cheaper than western brands, and shop seasonally – prices of fruit and vegetables vary throughout the year so take advantage of produce when it’s at its best and at a lower price.
  3. Being organised can also pay so go grocery shopping with a list and plan your meals so you don’t fill your trolley with items that don’t fit. Studies show that we spend less when we shop this way.

Top Tip #4 Credit cards – friend or foe?

Credit cards can be a useful tool, but only if you use them wisely and pay off balances in full. If you have money outstanding on cards, make repaying them a priority in 2018, then follow these top tips to make your card work for you.

  1. Always pay more than the minimum – that is just interest and doesn’t reduce the balance.
  2. If you have more than one card, pick the one with the highest rate of interest and focus on that first.
  3. To avoid the temptation of using credit cards when you really shouldn’t, take them out of your purse or wallet and leave them at home.
  4. It is useful to retain a card, but get one without annual fees, or one that has added benefits such as air miles, cinema tickets or cashback.
  5. Set up a standing order and pay the card off in full each month to avoid unnecessary interest.

Top Tip #5 Invest in insurance plans

Insurance policies, with the exception of life policies, are now subject to VAT, but can you reduce your premiums so they don’t cost you any more money?

  1. If you pay for medical insurance for you or your family, you can expect to see an immediate increase in premiums. All plans are for a 12-month period, but a few weeks before the next renewal date, speak to an expert broker to see if there are any alternatives that may provide better value for money. This is a complicated market, but brokers have access to all providers and it costs you no extra to get professional advice.
  2. Due to changes to mandatory requirements, we saw increases in the cost of motor insurance premiums in 2017, and now VAT will increase the premiums further. At renewal time, shop around to see if there are any better deals for the same cover. Comparison websites are useful for these basic products, and there are often introductory offers that can save you up to ten per cent on premiums.
  3. It is believed that fewer than 20 per cent of residents have home contents insurance, but when such plans can start at as little as Dhs200 a month, it makes sense to protect your possessions. Such plans are very easy to arrange and can be bought online.

Top Tip #6 Benefit from banking

You may review your credit cards or insurance policies, but have you ever considered changing bank? Many of us shudder at the thought, but the process is becoming easier. If you are being charged a monthly fee, or your bank’s service standards aren’t up to scratch, then you might benefit from a change.

  1. Opening a new salary transfer account can come with benefits for new customers, as some banks have promotions offering things such as cash incentives, air miles or prize draw entries.  A word of warning though: if you have a personal loan you may be in breach of the terms if your salary is paid to a different bank, so do check first.
  2. If you transfer money between currencies, perhaps to an account in your home country, you can usually get much better value for your money by using a third-party currency exchange company rather than your bank. Even if your bank doesn’t charge a fee, they will make their money by using uncompetitive rates of exchange. You can use a properly regulated currency broker without leaving the house and save significant sums over the space of the year.
  3. If you don’t already have one, you should also look into opening an offshore bank account. These have multiple benefits for expats and you don’t need large sums to set one up.

Top Tip #7 Good habits, good ideas

In addition to the points above, there are a few other ways to save a little cash, manage your money better, plan for your future, or protect your family.

  1. If you have children, own property or have assets, organise a will. In most cases this does not have to be complicated, or very expensive, but it can make a real difference to those left behind when you die.
  2. Anyone with dependents should look at life cover. The fact is that money makes life easier and providing for your family is the kind thing to do. You may be surprised how little life cover can cost.
  3. In a volatile world, we all need to have an emergency fund to draw on in the case of redundancy, illness, the need to travel to visit a relative, something simple like a broken-down car and myriad other reasons. This should be the equivalent of three to six months outgoings. Having this safety net can also be comforting.
  4. Take a little time to check bank accounts in your home country. Do you have direct debts or standing orders that are no longer relevant?
  5. You know that you need to plan for your retirement.  Now is always a good time to get started, or to address this seriously. There are many options, some of them flexible, so seek qualified advice.

Keren Bobker is an independent financial adviser who specialises in advising expats about sensible money management.