Residents of the United Arab Emirates earning less than 10,000 AED monthly face difficulties managing expenses for housing rent, transportation, groceries, and other daily necessities while simultaneously saving money.
The key is prioritizing essential living expenses, preventing lifestyle costs from growing proportionally with income increases, and forming a saving habit, even if the amount saved monthly is small.
Financial expert Vijay Valacha, Chief Investment Officer at Century Financial, provided practical advice on how residents can manage their finances, cut spending, and accumulate savings on a limited income, according to Khaleej Times.
Budgeting Principles
According to Valacha, when creating a monthly budget, housing should be the primary concern. He advises limiting rent expenses to approximately 30 percent of the monthly salary, although the available amount will depend on the resident's location and other financial obligations.
As a general guideline, Valacha recommends allocating about 30 percent of income to rent and an additional 5–10 percent to utilities.
What to do if rent is too high
If housing costs exceed the acceptable level, one should consider options like shared accommodation, choosing housing further away from major city centers, or attempting to negotiate rental terms.
For example, with an income of 7,000 AED per month, allocating 30 percent to rent would be 2,100 AED. For residents earning slightly less than 10,000 AED, studios in areas such as International City in Dubai or Khalifa City in Abu Dhabi can cost around 30,000–34,000 AED per year. Valacha emphasized: 'Rent should not exceed 30 percent of your monthly income.'
Valacha noted that housing, transport, and food combined can account for about 60 percent of the monthly income, especially for those living in more expensive parts of Dubai and Abu Dhabi. Transport and food are two areas where residents can review their spending and potentially reduce costs.
Managing Transportation Expenses
The expert advises allocating about 8–12 percent of income to transportation. Using the Dubai Metro and bus network with a monthly Nol card allows travel expenses to be kept below 200 AED. In comparison, owning a car can cost 700–1,000 AED or more per month, considering fuel, parking, insurance, and loan payments.
Groceries and Food Expenses
Valacha recommends trying to keep grocery expenses at about 20 percent of the monthly income. Tips include cooking at home more often instead of eating out or ordering food, buying groceries in bulk where possible, and planning meals to avoid unnecessary spending. Dining out should be viewed as a rare event, not a daily habit.
With a salary of 7,000 AED, allocating 20 percent to food yields a budget of 1,400 AED. Valacha observed: 'Food is probably the most underestimated budget category.'
Experts insist that savings should be treated as a planned expense, not as leftover money at the end of the month. Valacha recommends transferring at least 15 percent of income to a separate account immediately after receiving the salary, although he acknowledges that high housing and transport costs can make this difficult.
For those earning less than 10,000 AED, the following savings targets are suggested: 5–10 percent as a starting point if core expenses leave little room for accumulation; 15 percent as Valacha's recommended initial allocation for savings; and up to 20 percent as a long-term goal as financial circumstances improve.
For a person earning 7,000 AED per month, saving 5 percent amounts to 350 AED, and 10 percent to 700 AED. The priority should be building an emergency fund capable of covering three to six months of expenses. Valacha warns residents against excessive reliance on personal loans, credit cards, and 'buy now, pay later' schemes to cover daily needs, as interest rates and repayment obligations can turn one-time purchases into long-term financial burdens.
Before taking on any new payment obligation, one should check if they can service the debt after covering rent, utilities, food, and transport expenses, and also study interest rates, fees, and repayment terms. It is necessary to avoid taking on additional debt to maintain a lifestyle that does not match one's real capabilities.
Valacha also warned about the risk of sending a significant portion of income abroad before establishing a sufficient local reserve, as this could deprive residents of a financial safety net in case of unforeseen circumstances. A good starting point is setting a limit for each major expense category and adjusting that limit according to actual spending.
Main Takeaway
Budgeting with an income below 10,000 AED does not require a perfect formula. It is important to start by controlling housing costs, setting limits on transport and food, analyzing regular expenses, and transferring a realistic amount to a savings account immediately after receiving the salary. Even a modest and consistent saving habit helps build an emergency fund and reduces dependence on borrowing when unexpected expenses arise.