Five money topics to brush up on to boost your financial literacy

Understanding how financial matters work is key to a secure future

Zach Holz says there are five key areas to stay on top of: saving and budgeting; investing; tax optimisation or estate planning; avoiding fraud and increasing your income. Getty Images

Much of the UAE population is made up of residents from other countries, making financial affairs more complicated than if they were living in the country of their birth.

Whether overseas residents choose to stay in the country for a short or long period, understanding financial matters is key if they want to stay on top of their finances and save effectively. To clarify what financial literacy is, it is basically just knowing how to deal with money issues. To me, there are five key areas to stay on top of: saving and budgeting; investing; tax optimisation or estate planning; avoiding fraud and increasing your income.

As a disclaimer, I'm coming at this topic with an American slant but wherever you're from or live, you must educate yourself to avoid being exploited and losing money you cannot afford to. Let's break down each area to analyse the challenges:

Saving and budgeting

The need to save and budget is the same the world over. If you want to save money or have money to invest for your future, you must "grow the gap" between what you earn and what you spend. Certain jobs may give you an opportunity to save more, but there are plenty of UAE residents who earn big salaries and spend the lot, leaving them with nothing for their retirement. Others, meanwhile, make very little in comparison but are still able to save a healthy sum.

Investing

This can be really tricky with some nationalities barred from accessing certain investments, for example for tax reasons. Generally though, most can take advantage of low-cost, index fund investing through platforms such as International Brokers (IB) or Swissquote, without needing the "help" of a financial adviser (who is probably just going to sell you whatever makes them the most money in fees and commissions). There are great experts to help you get properly set up without exploiting you, such as Mark Zoril, a US-based financial adviser who says “hundreds” of UAE clients now use his $96  (Dh353)-a-year retainer plan, and Steve Cronin, the founder of Deadsimplesaving.com, who runs expat saving and investing workshops. But do your research before going down any investment route.

Tax and estate planning

This is where it gets really tricky, therefore it's one area people really need the help of a licensed professional. Tax affairs vary from country to country; it can depend on where you make your money, what you invest it in and what the current laws are in your home country. It can get even more complicated if you plan on retiring in a country that is not your place of birth. If you're saving for retirement and that retirement is a long way off, this can be almost impossible to optimise because you don't know what the laws will be like when you retire. The best option is to keep tabs on the laws and any changes to assess their effects on your finances.

Avoid fraud

This is hard to achieve, no matter where you're from.  This summer, someone hacked my brokerage account, but fortunately didn't transfer any money out. If you can, have two-factor identification on your financial websites and never give out your passwords or biographical information.  Make sure your passwords are super hard to crack, and use a password manager to boost your encryption.

Increase your income

This is another skill that can apply equally to all nationalities. To keep your income on an upward trajectory, keep studying and secure new certifications and skills throughout your career, preferably in things that are difficult and in high demand. That may not be fun, but it can be extremely profitable. Check out the book So Good They Can't Ignore You by Cal Newport for more great ways to do this. This also can make your job more secure, as you're harder to replace. Use that knowledge to negotiate raises or find a new, higher paying job.

To increase your financial literacy levels even more, there are numerous websites, YouTube channels and organisations to help you.  One that I can vouch for is the UAE Facebook group SimplyFI, a community of personal finance enthusiasts. It's filled with savvy expatriates based in the UAE that aren't trying to sell you anything. You can ask questions about any of these topics and get quick, pertinent, helpful responses from community members. They also have events and workshops for free throughout the year.

Financial information can be daunting but using the knowledge of others will help you get a handle on topics that will boost your finances for the long term.

Dubai schoolteacher Zach Holz (@HappiestTeach) documents his journey towards financial independence on his personal finance blog The Happiest Teacher