For many UAE residents, loans are a fact of life. But that doesn’t mean you need to be stuck with loan repayments for life. Whether you’re paying off a car loan or a home mortgage, a little discipline can go a long way to bringing your finances back into the black and strengthening your credit score. This article offers some quick strategies and suggestions that can help UAE residents meet their loan obligations on time by saving more money.
Budget for loan repayments, plus extra
Creating a budget is the first step to financial prudence. When you know how much money is available to you – and the consequences of overstepping your boundaries – it becomes easier to stay within your limits. Perhaps the most common mistake people make when they take out a loan is not budgeting for those monthly payments alongside outgoings such as utilities, grocery bills, school fees, and other necessities.
Ideally, budget for repayments before you take out the loan. If you already have a loan to your name, take a good look at your current budget to see where you can replace expenses with instalment payments. Draw up a new budget that prioritizes debt repayments. Then call your bank and set up automatic debits so you don’t get charged late fees for missed payments.
Remember to set aside a little extra for sudden or unforeseen expenses when planning your budget.
Rethink major purchases
Our high-consumption lifestyle makes it easy to spend money, particularly when retailers are rolling out unbeatable offers. But upgrading devices or buying luxury items shouldn’t become a regular occurrence. Not only do such purchases siphon away money saved, but also fund an unsustainable lifestyle.
Instead, establish a 48-hour delayed gratification policy to help bypass the purchase trigger until you can assess its impact on your budget. The same rule applies to mobile purchases.
Shop online, especially for groceries
Tempting as it is to shop in a mall, but doing so allows impulse purchases. Bought a pair of shoes because the salesman was friendly? Snagged a new phone case or box of pralines while you were waiting in a queue?
Shops are designed to get you to spend money. Supermarkets, for instance, put expensive items on shelves at eye level in the center of the store, so you often leave with heavy bags when all you went in for was a carton of milk and a loaf of bread.
A good solution is to buy your groceries based on a pre-determined list of weekly essentials, with non-perishables bought in bulk once a month. Defer the purchase of anything that’s not on your list to the following week – no matter how tempting the offer is.