The rising costs of living in the Emirates is the ‘single biggest factor’ for expatriates assessing their future in the UAE, according to experts from Guardian Wealth Management. Clients from the financial planning firm have voiced concerns over peak school fees, rising food and travel costs, and the introduction of 5% VAT, which has caused inflation to rise to 3.41% in Dubai and 3.9% in Abu Dhabi – well above the global rate of 3.1%.

“In Q1 of 2018 we have noticed an increase in clients voicing concerns over the rising costs of their outgoings. This is particularly troubling for expatriates who have come to the UAE to take advantage of higher wages and save long-term. Education fees are a huge factor and, despite recent reports, education fees in the UAE are actually increasing rather than decreasing in line with the Education Cost Index, which is currently at 2.4%,” says Gemma Frankland, Head of Global Partners at Guardian Wealth Management.

This means that in the next academic year, ‘Outstanding’ schools will be eligible for a fee adjustment of up to double the Education Cost Index, ‘Very Good’ schools are eligible for up to 1.75 times the amount, ‘Good’ schools are eligible for 1.5 times the amount; and rest are allowed an increase equivalent to the Education Cost Index.

“So ultimately, the better the school the more parents are going to pay. The families we look after always have education at the heart of their financial planning, and with the UAE already having very high costs for private education, this could be a deciding factor for whether some expatriates choose to stay in the Emirates or not after the summer break”, continues Gemma Frankland.

Additionally, with the implementation of a 5% Value Added Tax on goods and services, Guardian Wealth Management estimate that this has increased the average monthly outgoings of a family of four up by Dhs1,700, meaning thousands of families are feeling the pinch. With the announcement of increased fuel prices in May 2018 by 13-16 fils per litre, climbing costs are set to be a constant for UAE residents and are intensifying pressure on expatriates in the region.

Paul Butler, Dad of three from the UK said of the rising cost of living: “We have been in the region for around 7 years now and came here for a new opportunity in finance, and to enhance our lifestyles – but basically to get ahead, which wasn’t possible in the UK. We have had no option but to assess our lifestyle choices over the last six months, and ultimately the longevity of our time here.

“School fees for our elder two boys amount to Dhs160,000 per annum, and this is due to increase next term. This is a sizeable amount of money, what with the cost of living ever increasing. It’s meant we have had to cut back on most of the lifestyle choices we made when we came. So life can be a lot less fun nowadays, and we find ourselves asking the question is it all worth it?”

Guardian Wealth Management, who advise over 10,000 clients on their short and long-term financial planning, are keen to point out that although costs have risen, there is no reason why residents should not be able to offset the costs with savvy preparation.

“As with any part of financial planning, setting out a budget with fixed and variable costs is vitally important, and then being disciplined enough to stick to it is the key to not falling short. Use price comparison sites to ensure you are getting the best deals on your goods and services, and make sure to cut non-essential spending”, concludes Gemma Frankland.

Guardian Wealth Management offers tailored financial planning for families including budgeting, short-term savings and long-term structured savings and investments. For information, visit www.guardianwealthmanagement.com

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