Archives For Expenses

Happy New Year!

So, here we are in 2018 and you have been thinking about your personal goals for the next 12 months. Whether you’ve been in Dubai 1 year or 10 it is a useful time to take stock of your progress towards your longer term targets. So what should be on your financial check list?

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Insurance will never be able to replace those items of greatest sentimental value such as photos and other mementos which we all collect during our lives. It does enable us to trade a possible future event of unknown financial magnitude for a fixed value now, protecting us from financial loss.

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With medical insurance premiums rising at unprecedented rates it makes sense to use every opportunity to save money. Once you have reduced your cover to the minimum and added the biggest excess your insurer will allow there is little room for further savings. This is where an affinity group can help… Continue Reading…

There’s an advert on the radio at the moment which says that most of what your children will learn at school will be irrelevant by the time they leave. Certainly we live in a rapidly changing world but I am not sure the advert’s hypothesis stands up to close scrutiny. Basic skills like reading, writing and arithmetic will always be in demand. However other skills are becoming increasingly important…

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How To Plan


This week I look at financial planning and will offer  you some guidance on what you should consider when planning your future. To plan for any event such as retirement, for example, you need to consider the following:

  1. What resources do I have?
  2. Where do I want to be?
  3. When do I want to be there?
  4. Are my objectives realistic?
  5. Review

The first point is probably the easiest. A summary of your assets and liabilities as well as a detailed understanding of your income and expenditure will give you a clear picture of what resources you have available to you. In financial planning this one of the first things a financial planner will do when he meets with a new client.

Having established the current position it is necessary to know where we want to go – your financial and investment objectives. One of the problems many people have with financial planning is that it is a long process often covering decades, and, if we are honest: not very exciting. However, the end result, the reasons you make the sacrifices today are necessary, and should be personally rewarding. Having a clear vision of where you want to be and what you want to be doing is essential, as it is this picture which will keep you on course, and help you main investment discipline during your many years of investing for your future.

Failure to spend enough time on this section will result in you financially ambling from one idea to the next without any real direction, or worse still – failing to plan. Everyone’s vision is different but you need to make it as real as possible. Some people are better with pictures and others with words. You will probably know which suits you best. If it is pictures, have photos around the house or on your phone to remind you why you are making the investment. If you prefer words, write out a detailed description of your future and read it when you feel your commitment waning.

Having a timescale or investment horizon is equally important. Just as it is possible to drift away from an objective in physical terms it is also possible to let it slide in time. Putting the decision off ‘just one more month’ may not harm, but suddenly five years has gone by and you still have not done anything. This makes catching up very hard. Another common mistake is to skip payments if there were particularly high bills or a holiday one month. Your ‘future self’ will not thank you as this will further delay the long awaited day when the fruits of your labour will be harvested.

So, you have nothing in the bank, you are heavily in debt and you want to retire next year at the age of 45 with an annual income of £500,000. Yes, we are on section 4 – are the plans realistic. If after doing the sums you find you have no spare income and you need to save a lot of money, something has to give. It may be that some of the choices you make to enjoy today need to be deferred to tomorrow (i.e. cut down on current expenditure) and you may also need to trim back your goals to match your resources. Finding the balance between today’s and tomorrow’s needs is tricky. Often people completely under estimate their needs in the future. Could you afford to live on the amount you are currently saving for your future?

The final part of the process is to regularly review your planning to make sure it remains relevant. Your life circumstances are unlikely to remain the same as you age. Simply starting planning then forgetting about it is not an option. By reviewing regularly (two or three times a year) any adjustments will be small and incremental, thereby making them easier to manage. A review every five years could mean you have been off course for a long time and changes may be dramatic and hard to accommodate.

I hope the above is useful. Please let me know if you have any questions or comments.

Petrol prices in UAE are due to increase 24% with effect from 1st August. This will make the cost of petrol in UAE amongst the highest in GCC. However it will still be lower than in most countries round the world. Whilst there has been plenty of comment in the local press about the increase and the impact it will have on the cost of filling up the average family saloon, there are wider considerations for the economy.

Demand for fuel is, as economists call it: ‘inelastic.’ This is because we all need it and there are few alternatives we can quickly adopt to take its place. Therefore in the short term prices could increase dramatically and we would still pay. In the longer term people change their buying patterns and seek alternatives to avoid the higher prices.

The world’s economy is based on hydro-carbon fuel. There is virtually no business or industry on earth that does not have some need for fuel. By increasing the cost of this basic commodity the cost of all goods and services will eventually be effected as businesses attempt to pass on their increased production and delivery costs to their customers. The employed customers seek higher wages and a cycle of inflation begins. The UAE economy is linked US fiscal policy as the Dirham is linked to US Dollar. Consequently, the UAE authorities lack some of the traditional financial levers governments use to combat inflation, such as control over interest rates.

The amount by which prices increase will be dependent on the amount of fuel the business and its employees use. In UAE most goods are delivered by truck. At the present time, there is no rail option but we are fortunate that most trucks run on diesel which has not been effected by any price increase.

Additionally, the amount an average expat spends on fuel as a percentage of his or her salary is quite small compared to what they would spend in other countries. Therefore even a 24% increase should not significantly impact their standard of living. But they may opt for a more fuel efficient vehicle when they next change their family car.

Therefore whilst the increase in petrol price is not welcome, I do not believe that it could be used to justify significant price increases elsewhere and should not greatly increase inflation within the economy.

As always, please let me know if you have any thoughts or questions.

There have been many articles about the recently published Friends Provident International / The Economist Intelligence Unit (EIU) report on the cost of living in UAE. There follows one published in Emirates 24/7 which covers the main points and will be particularly useful for those considering a move to Dubai or Abu Dhabi.

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