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Dubai Expats Face Financial Misfortune By Not Saving Offshore

A new survey of expatriate professionals living and working in the Middle East, reveals that a very low percentage are saving towards their financial future.  Despite being in an enviable earning position and enjoying tax-free wages, it seems that many expats are just not taking advantage of their situation.  As a result they risk a bleak financial future…

However, most expats surveyed also stated that they believe their retirement income will come from their career savings activity – how they intend to bridge this gap is anyone’s guess!  The results of the survey were summarised by Annabel Kantaria on her Expat Telegraph blog, and interestingly one person to comment on the post pointed out that perhaps it’s simply a case of expats choosing not to save locally.

Commenter Zhanglan stated that in their experience, many expats living and working in Dubai instead choose to send their excess wealth home or offshore, not trusting local UAE banks.  So we decided to take a closer look at the situation and contacted 50 of our opted in Dubai based expats to ask them about their saving and spending activities, and their opinions about whether expats in the Middle East are in fact living beyond their means and risking their financial futures.

Of those we contacted for comment and opinion, all agreed with Annabel Kantaria’s observations that some expats who move to the Middle East get seduced by the inimitable lifestyle on offer in the UAE, and as a result they can easily live up to and beyond their means.

Lifestyle perks listed included luxurious housing options, luxury cars, the ability to hire staff, the social life available as well as the shopping options…

37 of our expats reported that their decision to go and work in Dubai had been solely based on financial reasons, with 19 from our survey group stating that the extra incentive of a tax-free salary was the ultimate lure for them to commit to a contract in Dubai.

When asked about the amount of cost of living research they had done prior to their relocation, none of our expatriates felt that they had had a good enough grasp of just how expensive life in Dubai could be before they made the move, and 27 advised that the rate at which the cost of living had risen in Dubai had made them totally rethink their reasons for being in the UAE.

The highest costs our expatriates face are accommodation, day-to-day living costs including groceries and travel, and school fees.

42 of our expatriates advised that they found it very difficult to put anything more than 10% of their salary away each month after meeting all of their financial commitments.  6 expatriates advised that they were currently saving nothing, and 2 of our sample group advised that they were saving up to 25% of their monthly salary.

Interestingly, of those questioned who are saving towards their financial future, not one is choosing to save locally in Dubai.  Reasons given included lack of faith in the local banking environment and/or greater faith in their chosen savings centres.  37 expats are saving back ‘onshore’ in their old home nation, utilising already established financial vehicles, and only 7 expats had realised the benefits available to them offshore.

As an expat living and working in Dubai, your living costs and the lifestyle lures are all massive potential drains on your monthly financial resources.  There are few options and alternatives available to those who want to live as frugally as possible – and expats with children seem to fare the worst of all in financial terms.

However, if you go to the Middle East with the ambition of working hard for the short term to accumulate a lump sum for your fiscal future – it is possible to realise your dreams.

How to Ensure You Make the Most of Your Time Living and Working in Dubai

The first thing you have to do is negotiate a realistic remuneration package with your new employer.  Elements to ideally factor in are an accommodation allowance, school fee allowance, an annual return flight home payment, and health insurance.

Naturally enough, gone are the days when employers would bend over backwards to accommodate their new employee’s requirements, but negotiating all this at the very outset will make the difference between you having a financially fortuitous time in Dubai, or a frugal existence.

The next thing you need is absolute discipline.  Whilst others may be happy to party and attend every offer of a Friday brunch or weekend on the golf course/at the beach club, you need to set your priorities slightly differently.

Following a financial review by a qualified and experienced independent financial adviser, by committing a certain amount each month to a dedicated savings strategy, most people find it easy to save and forget they’re saving!  But you have to commit to having a financial review, identifying your savings goals, working with your adviser to find the best policies for your portfolio, and then not overspending each month so that your future financial security is not compromised.

All it takes is a little bit of effort, a small amount of planning with an adviser, a final commitment to have X amount withdrawn from your bank account each month, and a promise to yourself and your family that you will not make the classic expat in Dubai mistake of living right up to or even beyond your means in a bid to enjoy every last trapping available in the UAE!

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