With layoffs and salary reductions increasing, experts say traditional saving habits are no longer enough and recommend that residents in the United Arab Emirates maintain an emergency fund covering six to nine months of expenses.
With many working professionals in the United Arab Emirates living paycheck to paycheck, financial experts are urging residents to treat emergency savings as essential. As layoffs, pay cuts, and furloughs become more common, they say traditional saving approaches are no longer sufficient.
Sonal Chiber said preparing for financial uncertainty has become “foundational to financial resilience.” She added that long-term investments and emergency liquidity should no longer be treated as the same pool of money.
“Individuals should aim to build an emergency fund covering six to nine months of essential living expenses,” Sonal Chiber . “This should be held in highly liquid, low-risk instruments such as savings accounts or money market funds. The key is to separate emergency liquidity from long-term wealth creation.”
The debt trap
When people in the United Arab Emirates face job loss or furlough, experts warn that turning to borrowing for essentials like rent or school fees can quickly lead to long-term financial strain.
Michele Carby cautioned that personal loans during financial stress carry serious risks, especially in the UAE’s legal environment. Defaults, she noted, can escalate beyond repayment issues and may even result in broader financial consequences such as lenders demanding other liabilities or, in severe cases, travel restrictions.
Financial content creator Kartik Iyer also warned against delaying the problem through borrowing, saying it often worsens the situation rather than solving it. He added that informal or illegal lending is particularly dangerous due to extremely high interest rates, harassment risks, and legal consequences.
Building an emergency fund
Experts stress that financial resilience starts with preparation. Kartik Iyer recommends first tracking exact monthly expenses, then building an emergency fund covering at least three months of costs—extended to six months for those with dependents—and keeping it separate from investment money.
Carby suggests a structured budgeting approach: roughly 50% of income for essentials, 20% for emergency savings, 20% for investments, and 10% for discretionary spending.
Beth Clay emphasizes automation, noting that saving should be system-driven rather than dependent on willpower. She advises building three to six months of essential expenses in accessible savings, followed by investing 10–15% of monthly income once the foundation is secure.
Salam Pappinissery added that those without savings may consider legal part-time or freelance work, but only with proper permits or employer approval, warning that unauthorized work can lead to fines or deportation.
Turning setbacks into recovery
Experts also point to recovery stories showing that financial disruption can lead to stronger outcomes. Some professionals who faced pay cuts or job shifts in the United Arab Emirates have successfully transitioned into consulting, reduced expenses, and built multiple income streams.
They note that past disruptions, including the Covid-19 period, underscored the importance of financial preparedness, as those with liquidity and discipline were better positioned to benefit from later economic rebounds, including in the property sector.
