While it may seem a while off, taking steps now could help you become more financially secure later in life.
Here are 6 ideas to help you save more now, so your money may go further in the future.
If you’re not already putting money into savings – or you just want to increase that amount – the first step is figuring out where the money will come from.
Creating a budget can help you understand where your money’s going and prioritise what’s important to you.
Start by reviewing your recent account transactions and splitting your spending into categories. Your essentials, such as rent, bills, food and travel costs, might be less practical to cut back on.
But other areas, like TV subscriptions or shopping, might be easier to limit.
You can put any money you set aside into a savings account. At the very least, this makes it less tempting to dip into than if it’s sat in your current account. And you could earn interest on your savings or even invest them for long-term returns.
However small the amount you can save, think about how much it could add up to over time:
Simply taking the time to consider the impact of the purchases you make and what they mean to you can go a long way towards your financial wellbeing.
Spending money on things that mean a lot to you, whether it’s a day out or a piece of clothing, can have a positive impact on your lifestyle.
Focusing on what you get real value from could help you cut back on the things you don’t need as much.
For example, investing in good quality furniture or clothing might cost more upfront, but you might find you’ll appreciate them more and they’ll last longer, costing you less in the long run. And it’s also better for the environment.
Explore: Financial wellbeing
If you’re struggling to put away any savings at the end of each month, try doing it at the start of the month.
Paying into your savings account before anything else comes out of your account each month is one way to put your future first.
Try setting up a standing instruction to go into your savings account for the day after you’re paid. And regularly check your bank balance to monitor your spending, as this might encourage you to spend less.
If you’re a UAE national, both you and your employer are usually required to contribute towards your pension[@pensions-and-end-of-service-benefits].
If you’re working in the private sector, you contribute 5% of your salary and your employer contributes 12.5%.
And if you’re employed in the public sector, you contribute 5% and your employer adds 15%.
But if you’re an expat living in the UAE, there are different rules.
As an expat, you won’t be eligible for mandatory pension contributions.
If you’ve worked at a company for at least a year, you’ll usually be entitled to end of service benefits when you leave, which you can put towards your retirement.
You might also still be able to contribute to a pension in your home country and qualify for tax relief.
You’re usually taxed on the income you draw from a pension in later life, whereas taking money out of a general savings or investment account won’t usually be taxed.
If you’re not able to contribute to a pension, or if you want to save more money alongside your pension, investing could help you achieve your retirement goals.
While a savings account can give you a guaranteed rate of interest, investing is an option with more potential reward.
Investments are higher risk, because stock markets can go down as well as up, but they can greatly outperform savings in the long run.
For this reason, investing is usually seen as a long term strategy (at least 5 years). A longer timeframe gives your investments more time to recover from downturns.
You can usually access investments relatively quickly if you need to, but you might be charged dealing or withdrawal fees.
If you’re saving for retirement, keep in mind that most pensions will automatically be invested for you by default as opposed to being left as cash.
Before investing, build up a separate emergency fund. A good rule of thumb is to have around 6 months’ worth of living costs saved for the unexpected. This will help avoid the need for you to cash in your investments if you lose your job or face any large, unforeseen expenses.
Our beginner’s guide to investing covers all the basics you need to get started, and you can explore our investment accounts to learn more.
How long you’re able to save or invest for is more important than how much you’re able to put away each month.
By starting early, you’re giving your future self a head start, no matter what kind of financial situation you end up in later in life.
The famous proverb goes: ‘the best time to plant a tree was 20 years ago. The second best time is now’. Even if it’s a small amount, time and consistency can allow your savings to flourish later down the line.
