x Abu Dhabi, UAESunday 21 January 2018

How expats can avoid the pitfalls of earning more in the UAE

Andrew Prince, a financial planner with Acuma, gives The National his take on the expatriate wealth report which revealed luxury lifestyles are being put ahead of saving.

Andrew Prince, a financial planner with Acuma, gives The National his take on the expatriate wealth report.

Noting that 97 per cent spend on luxury goods as a means of enjoying their salary and savings as well as keeping up with the Joneses, he points out the importance of keeping things in proportion. When saving and spending are out of kilter, problems arise. Expats are on the back foot from the start, he notes – accommodation costs in the UAE are usually far higher than back home. Typically we would expect accommodation to cost no more than 35 per cent of a client’s disposable income. However, when utilities are factored in, some clients are spending more than 50 per cent in the Emirates.

What to do?

The UAE is a fantastic country to live and work. However some of the privileges from back home, such as medical and pension provisions, don’t exist here. Therefore it is imperative to save and make provisions yourself, the responsibility is yours. Prevention is better than cure and where the expat is going to get added value, is by learning to save out of gross income.

The reality is, however, that people become absorbed in a hedonistic lifestyle and before long realise there is insufficient left at the end of the month to save.

This is true the world over. You only have to look at the lifestyle of some western countries with their massive TVs and new cars on the drive, and yet the pension and health services are in crisis. It’s almost an attitude of ‘it’s a problem for tomorrow’.

What’s the solution?

The difficulty is that in the UAE, so-called financial advisers are often poorly trained and have only the most basic of qualifications. If the adviser has a poor understanding of the expat’s tax situation back home (wherever that may be), how can his poor client, whose job may be anything but finance related, be properly guided?

I have 20 plus years’ experience as a professional adviser and invest more than 10 hours in accredited continuing professional development each month. Does this mean I know everything? Absolutely not. If you want to be at the top of your profession, you keep learning.

There are many good advisers in the UAE and the best way of finding them is via personal recommendation. Alternatively, speak to two or three and work with the one you feel most comfortable with, but do get advice.