The reasons most expats are working here in the UAE are compelling and many. The vibrant and multi-cultured Emirates offers desirable lifestyle, warm climate, architecture cutting-edge, offering finest shopping and leisure experiences in the world.
And two other things. The UAE and Middle East have long symbolised a region where expats can enjoy greater financial rewards for their toil and in a tax-free environment.
For the majority of expats who arrive on these shores the intention is to save, but all too often many end up doing the opposite. The temptation to spend on luxuries and lifestyle factors is a very real and present danger.
Despite the favourable tax climate, living expenses can so easily add up and spending a huge percentage of what you earn is easily achieved.
In my experience, most expats do not plan to stay in the UAE for their entire lives — an expat life is, typically, a fairly transient one. Many stay for three, four or five years, maybe even a decade, but for the majority, eventually the time will come to repatriate.
And it is important that when that time comes you go back with more than just a sun tan. Having worked in a region where the financial rewards are typically ‘very competitive’ and because it is tax-free — it would be a crying shame not to have accumulated more savings than you could have done if you had stayed in your country of origin. After all, this is why most expats are here.
One way to achieve this is to invest in a regular savings plan. Offshore Savings Plans offer an excellent way to get a better rate of interest than is available from onshore alternatives. Many of them are multi-currency, allowing you to save in the most favourable currency and withdraw cash or write cheques in any country.
There’s a huge range of Offshore Savings Plan account types including easy access, notice, no-notice, fixed rate and monthly interest — and, crucially, they allow you to build funds for the future. Indeed, they’re the perfect platform for you to reach a wide variety of financial goals.
Building a lump sum to cover any financial shortfall when returning home is, of course, essential but it isn’t the only driver for making a regular commitment to saving.
For many expats, making provisions for their children’s education and university fees tops the list of reasons to take out an Offshore Savings Plan. With overseas education, living and travelling fees add a substantial drain on resources and the total costs. Additionally, Offshore Savings Plans provide an excellent platform for retirement planning, enabling individuals to meet and even exceed their goals for when they stop working.
How should I save?
We’ve established that one of the key attractions to working in the UAE is the absence of income tax. We’ve also pointed out that there’s no place like the UAE to spend money.
However, there is a simple trick to saving that seems to work for the expats I have met over the years.
Imagine if you were ‘back home’ and paying income tax. At the end of each month, pay yourself a percentage of the income tax and put that money into savings. It’s a simple discipline and one that, along with the right regular savings plan for your needs will ensure you will be well provisioned, financially, for the future.
Plan ahead, save and secure your future
Done properly, a regular savings plan can offer an efficient means to realise greater interest on your savings and represent a better way to plan ahead and secure your financial freedom. As the saying goes, “make hay while the sun shines” and that’s exactly what attracts expats from all over the world to the UAE. But if you haven’t made provisions to put some of that hay into storage, the future consequences for your financial well-being could be dire.
The answer is to plan ahead now and invest in a regular Offshore Savings Plan.
By David Hughes
The writer is Middle East divisional manager of deVere Group. Views expressed by the author are his own and do not reflect the newspaper’s policy.
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