Tag: budget

How to save money on a limited budget

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The start of a new year is a great time to review your finances. Living and working in Dubai means many people have more disposable income than they did in their home countries and if you’re disciplined, this can translate into a healthy savings pot. However, it’s easy to lose track and end up saving nothing at all. Lots of people begin with good intentions, only to find themselves in a muddle halfway through the year. Follow our savings tips below and start on the path to financial stability.


Break down all your outgoings line by line. Rent/housing, bills, food, transportation, family support etc. Write an amount next to each one and then add it up. Hopefully this is less than your total salary. From what’s left, work out reasonably what you can afford to save.

Track expenses

Those using the NOW Money app can easily track all of their spending in one place as all transactions are recorded. However, for cash spending you can just use pencil and paper. Jot down every time you make a purchase. If you can see what you’re spending, it’s easier to see where you can make savings. Take out or restaurant food is a lot more expensive than buying food and cooking at home. Similarly, taking taxis can deplete your cash reserves a lot faster than the metro.

Set money aside

When you’ve worked out your budget and how much you can save, plan to set this amount aside each month. This should ideally be a minimum of 10% of your salary. The phrase ‘pay yourself first’ is a good one to remember. Essentially it means paying your savings first and then spending what’s leftover, rather than saving what’s left after you’ve finished spending.

Decide where to save

It’s important to work out where you will deposit your nest egg. Cash is not the best option as it’s too easy to dip into if you’re running a bit short one month. Also, if you live in shared accommodation, cash is a temptation to thieves. A good place to store your money is in a UAE savings account, however there are usually minimum salary requirements, which can exclude a lot of low-income people.  Another option would be to open a savings account in your home country although beware, some of your savings will be lost in foreign exchange fees. Those using NOW Money can keep their savings secure in their UAE-based account, which has no minimum salary requirements.

If you earn over AED 1,000 a month, you can also invest in UAE Bonds from as little as AED 100. Whilst you won’t earn interest, you will be eligible for cash prizes of up to AED 1 million!

Be disciplined about spending

In Dubai there are lots of temptations to spend. Trips to the mall, going to a restaurant or buying take away food as well as days out can all seriously dent your savings. If you’re targeting a certain number for your savings pot, keep spending to a minimum and be strict about what you buy. Your future self will thank you, even if it’s tough going without the fun stuff for a while.

Say no to family demands

This is the hardest part of saving for yourself. Families often perceive those working abroad as having a lot of money and expect to receive money either as regular payment or when you go home for a visit. Whilst you shouldn’t feel you need to cut family off completely, especially if they are the reason you’re in the UAE, it might be worth reminding them you also need to save for your own future.

Not everyone can save as much as they would like to but with hard work and discipline, you should be able to at least put something by. No one wants to leave Dubai without any savings and the best way to ensure that happens is to start today and make this the year that you build your financial future.

Financial modelling for start-ups. Part 5: Projected Financial Statements

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Projected Financial Statements (otherwise known as pro-forma financial statements) refers to a set of financial statements which are an important part of a business model. No, not important, ESSENTIAL. It’s actually the apotheosis of the whole business model and is the first thing that’s turned to when someone looks at it. Whatever has been done before, is only in preparation for creating these statements.

The pro-forma should contain the following three statements:

  • Profit and Loss
  • Balance Sheet
  • Cash Flow
  • (You can also include Statement of Change in equity if you are willing to, but investors usually only want to see the first three)

In this post, I am going to look at the simplest way to produce the pro-forma Balance Sheet and Profit and Loss statement. In the next blog, I will look at the Cash Flow Statement and Statement of Changes in Equity.

First thing’s first, let’s talk about the Statement of Profit and Loss. It’s the easiest one to do, which you’ll remember if you’ve followed my blog from the beginning. If not, to make a Profit and Loss statement in Excel, you should have a detailed (ideally, monthly) budget, where all your expense items are attributed to certain expense types, as they are going to appear in your final Profit and Loss statement. Then simply, by using the Sumif function, you summarise all your budgeted figures on an annual basis. The process looks like this:



Once you have your Profit and Loss statement, you can use it as a starting point for creating your Balance Sheet.

From the Profit and Loss statement you need the Net Profit figure, which you will use for your Retained Earnings in the Balance Sheet (within the Equity section). For the first year the Retained Earnings will be equal to the Net Profit figure. Every subsequent year’s Retained Earnings is the Retained Earnings from the previous year, plus Net Profit for the current year.

Then you need to work out the components of your working capital, which I covered in Financial Modelling for Start-ups. Part 3: Working Capital.

Next, I suggest you calculate your Cash line. In order to do that, you need to make sure your budget has a line for cash (or bank – doesn’t really matter how you name it) at the bottom. This is where you summarise the income, (less expenses, plus investment) you are planning to receive and any loans. Ideally you should track it on a monthly basis against your actual cash in bank. Once you have that sorted, use the amount at the end of the year for your Balance Sheet Cash account. Then it needs to be adjusted for the accounts receivable and payable by decreasing it by the amount of receivables and decreasing it by the amount of your payables.

If you have investment coming in, include it in your Capital within Equity, and corresponding amount, to the Cash line. If you have a loan, add a line for Long or Short-term loans in Liabilities and the corresponding amount goes to Cash.

Capital line should include all capital put up as of the Balance Sheet date and the same amount should either be in Receivables from the owners or Cash (included in your budget in the Cash line as well).

That’s it for this blog, in the next one we will cover the other two financial statements to make your business model look even more beautiful!


Financial modelling for start-ups: preparing a budget in 5 easy steps

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If you are thinking of starting your own business or have already started one, sooner or later you will face questions such as:

  • What is my burn out rate?
  • Will I be able to afford to hire a sales director?
  • How many customers do we need to break-even?
  • How much does my company cost?

In order to answer these and many other questions, you need to have a financial model in place. More importantly, if you need to raise further funds to grow your company, a financial model is something which will prove invaluable.

As Winston Churchill once put it:

Plans are of little importance, but planning is essential.”

The same applies to a financial model. It doesn’t have to be precisely correct, however it does need to show that you, as a founder, know exactly how your business operates and what you are trying to achieve.

There are different templates available on the web for financial modelling, however, in my opinion, using someone else’s template is like wearing someone else’s suit – it just doesn’t feel right. If you want to feel comfortable you need to have one tailor-made just for you.

A good financial model has the following components:

  • Budget (monthly or quarterly)
  • Assumptions for revenue and cost
  • Projected financial statements (balance sheet, income statement, cash flow and statement of equity)
  • Headcount or hiring plan
  • Working capital assumptions
  • Key metrics
  • Sensitivity analysis

If you don’t have a financial background, the five easy steps listed below should be enough to get you going and prepare the first part of the financial model, the budget, which is a great starting point for drafting financial statements and other key financial and operating metrics.

The five steps

1 – Start gathering actual data

When starting a business, you may feel that keeping track of your expenses is an arduous and boring task. However, I would highly recommend that you remember, (no matter how boring it sounds) to separate your business expenses from your personal ones! Get a separate credit card, separate bank account – whatever works best for you – but make sure you keep everything separate, it’s highly important! After this is done, start collecting all of your business expenses’ receipts and invoices and inputting them into a simple Excel table which might look like this:

Excel data gather 1 HR

It is very crucial to add a date column, where you input the dates stated on your receipts and invoices, which ideally highlight when the product was purchased or service was rendered.

2 – Simplify the presentation of your expenses by type

After the data is gathered, you need to add another column and classify all expenses into several categories. For a start-up company these are the main expenses that most likely will be present:

  • Administrative expenses – office rent (probably in a shared area), stationery and subscription to admin software such as Dropbox, Microsoft, etc.
  • Staff related expenses – salaries – this can also fall into the administrative expenses category, but due to its significance it is better to separate them
  • Regulatory expenses – licensing, other legal fees, and notarial fees are significant in the first year, therefore also suggest to present them separately
  • Selling and Marketing expenses – google ads, attending marketing events and PR campaigns, etc.
  • IT costs – if you are a digital start-up, IT costs would constitute a major part of your profit and loss statement, therefore it is wise to present them separately as well.

After this exercise is done, your table might look like this:

Simplify data 2

3 – Accumulate your actuals by expense types and by periods (whether months or quarters)

This step simply means presenting your actuals in an aggregated format based on the expense types and periods. By using the Excel formula Sumif, your actual transactions will be accumulated and presented by expense types:

Accumulate 3

In this table, columns are months, meaning that this budget is prepared on a monthly basis. To do that, after the dates are inputted in step 2, by using Excel formula Month, they can be distributed to different months which they relate to.

4 – Start projecting your expenses and revenues for future periods

After you have finished inputting your data, it’s time for projections, which, in my opinion, is the most exciting part of financial modelling! If you have already incurred expenses, then it should be fairly easy to predict how much something will cost you later on. However, if there is a new expense – then you need to do some research on how much it will cost your business. And if you have no idea whatsoever on where to go for an answer – then you need to start making assumptions.

5- Accumulate assumptions

Create a separate sheet for assumptions where you will accumulate all data related to future expense and revenue drivers. One of the advantages to keeping them on a separate sheet, is that after you link them in your budget table, you can easily change your projected data by changing those assumptions. Another advantage is that it makes your calculations transparent for someone who wants to review them.

Assumptions can include the following:

  • Growth rate or your customers’ number or projected customers’ number in absolute amounts
  • Number of customers per sales agent
  • Office rent per year
  • Technology cost per user, etc.

After you have performed these 5 steps above, you will have a budget which will be a very important source of information for preparing projected financial statements, key metrics and valuation for your company.

Stay tuned to the blog for the rest of my “five easy steps” series, which will help you create the entire financial statement.