Governments have wrestled with austerity programmes, now it is the turn of everyday people to deal with less money. How are they making their tough choices?
Learning to live with less
Downsizing from a petrol-guzzling four-wheel-drive vehicle to a more economic saloon car makes sense for British building project manager Alan Cave.
The 29-year-old made the decision to switch after his job moved to Abu Dhabi from Dubai six months ago. The gruelling three-hour-a-day commute has taken its toll on Mr Cave's wallet, with his fuel bill doubling to Dh400 a week.
Now his silver six-cylinder Nissan Pathfinder is up for sale as he looks to trade it in for a Ford Mondeo or a similar-sized model.
"It's common sense as the good times are gone," says Mr Cave.
"I'm looking for something more economical; one for insurance and two for fuel."
His daily commute between his home in The Springs in Dubai and building sites on the far side of the capital's Corniche drains three quarters of his fuel tank. The international construction consultants Mr Cave works for switched its focus to Abu Dhabi after the financial downturn dried up building projects in Dubai.
Cutting back on his car is not the only adjustment Mr Cave and his wife, Sally, are making to their lifestyle since the financial downturn hit the UAE. The couple's shopping habits have also changed.
"We used to shop in Waitrose and now we're doing a monthly shop in Lulu instead as it works out a lot cheaper to buy most essential items in bulk," he says.
Mr Cave is not alone in his actions. Signs are emerging of people choosing to take steps to trim their expenditure after the crisis and reorganise their finances. Job losses and salary cuts have forced some individuals to make tough financial decisions. Others who have been fortunate enough to avoid these scenarios have been prompted by the desire to turn over a new leaf and prepare in case of future crises.
"It is prudent for individuals to review both their expenses and savings after the global financial crisis," says Darren Ashley, the managing director of the Dubai-based financial advisory company Candour Consultancy.
"[This is] to ensure they are not wasting money unnecessarily and they have sufficient saved for short-term emergencies, such as losing a job or a long-term injury or illness, and longer-term requirements, such as higher-education costs for children and retirement."
Financial experts suggest a good way of starting to save is to first work out some of the biggest day-to-day personal expenses; be it housing rent, petrol, shopping or evenings out.
Once identified, it's then a case of an individual working out how savings can be made.
Negotiating a discount on your annual housing rent, car pooling to work, changing shopping patterns or reducing nights out are all ways of reducing hefty outlays.
Combining expenditure cutbacks with a prudent investment strategy is also important, say analysts. Lower-risk blue-chip equities and US Treasury bonds are considered among the safest financial investments.
UAE residents are for the most part likely to be relatively unscathed by the kinds of austerity measures facing taxpayers in Europe and Japan, with governments there embarking on a stream of stringent cost-cutting measures to reduce runaway public spending and downsize bloated budget deficits.
Oil revenues provide a cushion for the UAE Government, allowing it to push ahead with most expenditure plans. Only a recent double rise in petrol prices has directly stretched the personal budgets of consumers, as Mr Cave found out to his cost.
In contrast, other international governments have taken an axe to public spending. The UK government this month set out the sharpest cuts to public expenditure since the Second World War. Trimming benefits and military spending and cutting public sector jobs are at the heart of the government's plans to save £81 billion (Dh469bn) between now and 2015. Some taxes will also increase to help overturn a spending deficit.
This year, public sector workers took to the streets of Greece to protest against the government's approval of a new package of tax increases and spending cuts to save €4.8bn (Dh24.7bn), while Italy plans to freeze civil servants' wages for three years. In Japan, a 10 per cent spending cut across all ministries has been approved.
Signs of the austerity effort starting to bite are already emerging. Consumer confidence in eurozone countries Spain, France and Italy fell between the first and second quarters of the year, according to a survey by the New York-based Nielsen.
Further research from Nielsen found that consumers in the US were still focused on repairing their household balance sheets, with nearly half of householders allotting income remaining after essential living expenses to savings and paying off debt.
Financial experts suggest individuals can adopt similar austerity measures to those employed by governments to their own personal budgets. Some individuals facing problems from the downturn are already taking steps to get their finances back in order after a challenging year.
A pay cut and a collapse in the property market has prompted Louise Mackenzie, from the UK, to become more cautious in her financial outlook. The 36-year-old was shaken by her experience in her previous position working for a property company after she received a 10 per cent pay cut and had to watch as friends and colleagues lost their jobs.
She has also had to contend with debts to repay. She is in negative equity after buying an apartment in Dubai Marina at the height of the property market in 2008. In addition, Ms Mackenzie owes money on a property in Hawaii, where she lived previously.
Since the downturn, she has moved to a better-paid job as a sales manager for a catering company in Abu Dhabi. The change in fortune, however, has not stopped her from fostering a more frugal perspective with her money.
She has doubled the amount she sets aside for long-term savings, from 5 per cent to 10 per cent of her salary.
"The financial crisis is in the past, but for me it's more about the risk and covering my liability," she says. "I have definitely become more risk averse and cautious about putting money aside, whereas maybe in the past I may have blown more money at the weekend or on a holiday."
She tries to keep at least three months of her salary "in hand" in an offshore savings account as well as a small amount of money in a safe at home for emergencies.
"I have managed to keep myself above water and although maybe the benefit of what I'm doing now will be in 20 years rather than five years, it will be worth it in the end," she says.
Her day-to-day spending also changed when Ms Mackenzie decided to cut back on buying food in her work lunch breaks and instead bring in her own sandwiches.
For those considering taking similar steps to rebalance their finances, financial experts say drawing up a budget is a sensible first move.
"It is imperative that all expenditure is included in the budget right down to every last Starbucks," says Sarah Lord, the wealth planning director for the financial advisory firm Killik & Co in Dubai. "Typically by drawing up a budget, savings of up to 10 per cent a month can be identified. These savings could then be put to good use such as repaying debt or if you don't have debt, then funding other financial planning objectives."
Mr Ashley says starting small is a good start.
"We always say, save what you feel comfortable saving. If you find that you are not missing this money after a few months, there is nothing to stop you increasing your savings at this time," he says.
"However, if you overstretch yourself from day one, you will resent saving and potentially even get yourself into financial trouble if you cannot reduce the savings or get access to some of the money you have put aside."