UAE Interest Hike: How to Save during Times of Inflation

The UAE is facing an inflation hike as a result of various current worldwide crises. UAE financial experts are advising residents to think about how they manage their money in order to help them cope with the rising prices.

Rising prices have a corrosive effect on investments that cannot be ignored. As a result, citizens must always be on the lookout for assets with higher returns than the current inflation rate.

Here are a few ways to beat the inflation, according to experts:

1. Start investing
Individuals have prioritized investments based on their income. However, be careful if you are currently investing. Experts suggest not to simply overlook any accomplishments and returns of any company, goods, or services.

It is also recommended residents to make long-term investments in equities. “It is one of the best ways to stay ahead of inflation. However, equity investments usually carry a time horizon of at least 5 years, sometimes even longer,” he said.

2. Make a budget
Experts also claim that budgeting should be on the top priority on the list. If you haven’t budgeted in a long time, getting started now will save your money from the financial effects of inflation.

It is also suggested to cancel streaming subscriptions and limit dining out especially during the pandemic, as released in an article by Associated Press.

3. Set a limit on your credit card spending
Consumers will eventually pay more on any revolving debt if central banks raise interest rates. Credit card interest rates are likely to change now that rates have been raised, usually within a billing cycle or two.

This practice helps you from overspending and encourages you to plan ahead of time for your everyday expenses, reducing your loan interest payments.

4. Don’t put off big purchases
Anything you know, you want and can currently afford, may be better purchased sooner rather than later to avoid price increases. Valecha claimed that “Over the past year, the cost of cars, home improvement projects and holidays have all risen, and shortages might put more upward pressure on prices. If you can afford to book large purchases now, it may save you cash in the long term.”

5. Have enough savings
Families should always try to have enough money to cover any unexpected expenses. It is ideal for individuals to save 25 to 30% of their income.

Associated Press shares that a family should always keep a six-month emergency fund to protect themselves against price fluctuations. as the cost of borrowing rises, higher interest rates trickle down to consumer items like loans and mortgages, increasing their costs.

The report also recommended acquiring bonds for long-term savings. Saving money for short term or for an emergency is a good idea, but if you have money saved that won’t be utilized within the year, then you should invest in treasury bonds.

No one knows what the future holds, but by changing how you spend and where you keep your money, you may be able to better survive inflation.