Financial planning is the process of turning what you want your money to do into a plan with amounts, dates and an investment approach for each goal. In the UAE, that plan has to allow for circumstances that are less common elsewhere: there is no personal income tax on salaries, expats generally have no state pension, residency is often linked to employment, and most expats expect to leave the country at some point. The six steps below allow for each of these.
A goal becomes something you can plan for when it has an amount, a date and a priority. “Saving for university” is an aim; “funding four years of university from 2032, paid in sterling” is a goal. Writing goals this way also shows the currency each one will be spent in, which matters for expats. A simple financial planning form listing each goal with these four details is often enough to start.
It can help to group goals by time horizon:
When goals compete, ranking them helps: essential goals, such as a reserve and retirement, usually come before discretionary ones.
Because the UAE levies no personal income tax on salaries, saving can be easier than in many countries, but most expats have no payroll deduction building a pension for them, so saving has to be deliberate. A practical first step is to record income and spending for a few months, then set a savings rate and transfer it automatically when your salary arrives. Bonuses can be allocated to goals in advance rather than absorbed into spending.
An emergency reserve is cash kept for unexpected costs or a loss of income. For many expats, residency is tied to employment, so the reserve may need to cover a job search or an unplanned move as well as living costs. Its size depends on job security, family commitments and how quickly you could cut spending, and it is usually expressed as a number of months of essential expenses.
Insurance, such as health and life cover, can protect a household against events a reserve cannot absorb. Insurance is outside the scope of this article and should be discussed with a licensed insurance provider or broker.
Goal investing means matching each pot of money to the goal it is meant to fund. Money needed within a few years is generally held in cash or lower-volatility assets, because there may not be time to recover from a fall. Money for goals ten or more years away can usually accept more short-term volatility in exchange for the potential for higher long-term growth, although no outcome is assured.
| Horizon | Main priority | Assets often considered |
|---|---|---|
| Under 3 years | Stability and access | Cash, deposits and short-term instruments |
| 3–10 years | Balance of stability and growth | A mix of bonds and diversified equities |
| Over 10 years | Long-term growth | Diversified equities and other growth assets, with bonds for balance |
The right mix for each goal also depends on your attitude to risk and capacity for loss. Our guide to investment portfolios and asset allocation explains how to set it.
Private-sector employees in the UAE are generally entitled to an end-of-service gratuity, and some employers offer a workplace savings scheme instead. These benefits can form part of the plan but may not be enough on their own; our guide to retirement planning for UAE expats explains how they work.
When a lump sum arrives, the question is whether to invest it at once or in stages. Vanguard (2012) found that, in the US, UK and Australian markets studied, investing immediately beat phasing in over 12 months in about two-thirds of rolling historical periods, although phasing in may suit investors most concerned about regret. Past performance is not a reliable indicator of future results. Our article on dollar-cost averaging versus lump sum investing covers the trade-offs.
Most expats are likely to leave the UAE one day, whether for retirement, family or a new role, and a plan that assumes indefinite residence may fall short at the moment of the move. Relocation planning asks where you are likely to live next, which currency you will spend in, and how the move will affect tax and access to your assets.
The UAE’s currency is pegged to the US dollar, so salaries paid in local currency have a fixed dollar value at the peg. If your future spending will be in sterling, euros, rupees or another currency, holding everything in dollar terms leaves the plan exposed to exchange-rate movements. One approach is to build exposure to each goal’s currency gradually as the goal approaches.
The country you move to may tax income, gains or assets differently from the UAE, and the timing of a move can affect how investments are treated. Some countries also tax residents on assets held abroad. Because these rules are complex and change, consult a qualified tax adviser in the destination country well before you move.
A financial plan is a working document. Reviewing it at least once a year, and after events such as a new job, a change in family circumstances, an inheritance or a decision to relocate, helps keep it aligned with your life. A review typically checks:
Some people build and run their plan alone; others prefer to work with financial planners. You may need a financial planner if you have several competing goals, a large lump sum to invest, assets in more than one country or limited time to manage the plan yourself.
When choosing an investment planner, ask which regulator licenses the firm, how the planner is paid, whether recommendations come in writing with their costs and risks, and whether the planner will coordinate with your tax and legal advisers. Under UAE federal securities rules, financial planning was brought within the financial consultation and financial analysis licence. Our page on working with a financial advisor in Dubai explains how a first consultation with Elevate works.
Financial planning is the process of setting goals, organising cash flow and reserves, and choosing an investment approach for each goal, then reviewing the plan as circumstances change. It covers your whole financial picture rather than individual investments.
Not everyone does. A planner may be useful if you have several competing goals, assets in more than one country, a large lump sum to invest or a move from the UAE approaching. Any planner should be licensed for the services offered.
At least once a year, and after major events such as a new job, a change in family circumstances or a decision to relocate. Regular reviews help keep each goal’s investments aligned with its time horizon.
Start well before the move by identifying where you are likely to live, the currency you will spend in and how the destination country taxes income and assets. Confirm how end-of-service benefits will be paid and whether your accounts can be kept, and take advice from qualified tax and legal advisers.