03-06-2025
UAE: Have you calculated where all your money goes every month?
Have you ever reached the end of the month only to find your bank balance mysteriously lower than expected? You're not alone. Whether you're a new graduate starting your career or a parent juggling school fees and groceries, the question is the same: Where does all my money go every month?
It all boils down to tracking your spending and coming up with a budget for how much you will spend each month and on what. But let's start with one big myth – budgeting isn't about restricting yourself. It's about having better awareness and control over your money.
Know your numbers
The first step in mastering your money is understanding your income and expenses. Start by writing down all your sources of income: your salary, freelance gigs, passive income or side hustles.
Next, track your spending. For at least a month, record every dirham you spend - on rent, groceries, utility bills, transport, takeaways and subscriptions.
This is where technology can be your friend as there are now many apps that help track your spending such as Spendy, Wally, Buddy and Yabi. They may have silly names but they can really save you time – and hopefully money. Yabi is a homegrown financial app that uses AI to not only track your spending buy then give you some actionable insights to budget better.
Many UAE banks also have their own budgeting tools you can use for free. For example, Liv digital bank, part of Emirates NBD, has a budget planner to see how you can change your spending patterns.
Using these tools can be very eye-opening. You may discover you're spending more on food deliveries like Careem, Uber Eats and Deliveroo than you thought. And you might unearth those unused online subscriptions that are draining your wallet. But knowledge is power as they say – once you know you can then take action.
Rakhil Fernando, the CEO of Yabi, which targets individuals between 25 and 35 years old, said: 'We want to reach users before they develop poor financial habits, so they avoid common pitfalls like lack of savings or overspending.'
In Dubai especially, given its glamorous and fun image, many workers are dining out frequently, going to clubs and bars while others are frequently buying designer labels and the latest electronic gadgets.
Categorise your expenses
Personal finance experts recommend you break your spending down into three main categories. First you have your essentials like rent, utilities, groceries, transport costs and school fees. Around 50% of your income should be allocated to these. In high-cost cities like Dubai or Abu Dhabi, rent may take up more than 50% - that's okay. The idea is to put it all down first and then adjust accordingly.
Next you have your lifestyle spending – dining out, clothes shopping and entertainment. This should be around 30%. This may be a challenge living in a city with non-stop nightlife, fancy restaurants and fast food delivery apps.
Then you have your financial goals – what are you saving towards and how much are you putting aside each month? You could be paying off debts instead. Record how much you are setting aside in savings and investments, which should be about 20% of your income.
Set SMART goals
Financial goals deserve their own section as ultimately you want to budget better in order to save money for the things you want – that dream holiday, a new car, your kid's education. Goals give your budget a purpose.
Start with short-term goals, like saving 5,000 dirhams for a staycation, clearing a credit card, or building a 3-month emergency fund. Then look at long-term goals – such as a deposit on a house or that new SUV.
SMART stands for Specific, Measurable, Achievable, Relevant, and Time-bound. So instead of vaguely saying 'I want to save more' you will write down 'I'll save AED 500 a month to build an AED 6,000 emergency fund by next summer.'
Be realistic
Most budgets fail, much like diets, because they are too restrictive. It's hard to suddenly stop going out for meals when these are part of your normal routine. Instead, you can set limits on how much you will spend on specific things like lunches out, taxis etc. This is where the budgeting apps come in very handy. ADCB Hayyak, and Mashreq Neo are two banks that offer budgeting features that let you set limits and get alerts when you're near them.
Review
Budgeting isn't a one-off activity. It's something that you should be doing regularly, ideally at the end of each month. It doesn't need to be hard work and can actually be fun – if you save more than expected at the end of the month then treat yourself to a small indulgence. And gamify it - set targets for you and your partner to beat and compete with one another. Also, don't be too hard on yourself. We all have lapses and make mistakes. Just quickly get back on track afterwards.
Make it work in the UAE
Living in the UAE brings unique financial opportunities — and pressures. Many residents enjoy tax-free income, but also face high living costs, social expectations, and the temptation to spend big. Salaries can be generous, but it's easy to fall into the lifestyle inflation trap — the more you earn, the more you spend. Don't be one of them.
