Prior to making the decision of borrowing money, it is important to first decide not to buy the things that we want.
A question to put things into perspective is – “do I really need this?”. For expenses that are not mandatory nor essential it is a good habit to save for them, creating short- and long-term goals and saving until one has enough money, instead of borrowing.
A reason to borrow money is if it would take a long time to save up enough money to buy the item needed, and it is required straight away. However, if that is the case, one should ensure you have enough future income to pay back the debts. A Debt is an amount of money borrowed by an individual as a method of making large purchases that they could not afford under normal circumstances, and you need to have enough income to pay it back.
Income is money received and it includes money coming in from all sources, both earned and unearned.
Value For Money
A big concern for most types of spending is getting value for money. This does not always mean getting something at the cheapest price, the cheapest item might lead to a ‘false economy’. Value for money is defined as the most advantageous combination of cost, quality and sustainability to meet your requirements.
Money and Currencies
The meaning of money:
UAE
In 1973, the UAE Currency Board issued the nation’s first banknotes. In 1982, the Central Bank of the UAE released a second issue of UAE paper currency, following the transition from the UAE Currency Board to the CBUAE, instituted by Union Law No. (10) of 1980. As a result of this transition, the current CBUAE banknotes - which are familiar to us today - replaced the previous issue of UAE Currency Board notes. Alongside currency used for everyday transactions, the CBUAE also mints commemorative coins to celebrate the many highlights and achievements of the United Arab Emirates.
Source: https://www.centralbank.ae/en/our-operations/currency-and-coinsFinancial Planning and Informed Choices
Medium- and long-term financial planning is done because people want to achieve their aspirations and to finance life events. Examples of planned events include the following:
Emergency Fund
People can use the extra income to make sure they have savings they can access instantly in an emergency. Recommended emergency funds are equivalent to mandatory and essential expenditure for three months. However, people with expensive debts need to consider having a smaller amount of savings and repaying their borrowing.
Achieving Financial Awareness
Life Cycles
A personal life cycle attempts to summarise the key phases which all individuals go through during their lifetime matched with their changing financial needs
Needs, Wants and Aspirations
Needs are essential, ‘must-have’ items that everyone must have to survive
Internal and External Factors
Internal factors are those that come from within people themselves