Follow these steps to make saving a hard habit to break

Khaleej Times

29-05-2025

From paying your credit card bills to going out for dinner with friends, we do many things on a monthly basis that have become habits – they are part of our routine. So why not treat saving money the same way? Turn it into a monthly habit, maybe at the end of every month or whenever your salary comes through. In a few years' time, you will be glad you did.
Habit forming
Let's start by being realistic. If you have never saved before, it can be hard to start. A bit like going to the gym. You need to start saving and then quickly turn it into a habit. And developing a new habit doesn't need to take that long. For some tasks, they can become a habit in a matter of weeks, others take months. For saving money, you could make a note in your phone's diary as a recurring monthly event. Then you will be sent an alert and reminder to take action. From a psychological standpoint, saving every month trains your brain to prioritise future security over current spending. It makes budgeting easier, and your savings become a non-negotiable 'expense'.
Make it easy
Like with all habits, if they are simple and easy, then we are more likely to stick to them. Even better, what if you could automate saving money? For example, you could set a limit on your current account of Dh5,000, so that any amount above this is automatically swept into a savings account and earns a high rate of interest. Check with your bank to see if this facility is available. LIV has a number of innovative savings accounts such as Goal and Money Ahead.
With Goal, you can earn up to four per cent interest a year if you follow a few rules, one of them being you need to transfer your salary into LIV. The Goal savings account has an option called 'Set & Forget' which sets automatic rules where you save a fixed amount every day, week or month. This sounds like a great way to automate your savings in case you forget.
Eighth wonder of the world
When you save money you earn interest which leaves you with a bigger amount. And then you earn interest on this bigger amount, interest on top of interest, or compound interest to use the correct term. Albert Einstein famously described compound interest as 'the eighth wonder of the world,' adding: 'He who understands it, earns it; he who doesn't, pays it'.
So you want to be the one earning it, not paying it. This example should help convince you:
Let's say you save Dh1,000 a month earning an annual interest rate of five per cent. In just five years, this will be grow to Dh78,000 and in 10 years it will grow to Dh155,000. Without any interest being paid and then not compounded year on year, your savings would only be worth Dh120,000 after 10 years. Now you can see the power of compound interest. And when is the best time to start saving? Yesterday. And the second best? Today. People often regret not saving sooner, but almost no one regrets having saved early in the lives.
Best accounts
Now you have been convinced that now is the right time to save, the next task is to find the best savings account. Some of the higher paying ones will give you upwards of four per cent but you need to read the small print to make sure you satisfy the terms. Some involve locking your money up for a set period, which you should be comfortable doing as you are starting a new long-term habit. Others may require a minimum balance to qualify for the higher interest rates. Banks do summarise the benefits and T&Cs but you still need to read them.
ADCB Super Saver Account pays up to five per cent, which includes a base rate and a bonus rate, but read carefully the requirements needed to qualify for the bonus as it includes minimum balances you need to maintain. Emirates NBD will pay 4.5 per cent on new money going into its Plus Saver UAE dirham account while RAK Bank is paying six per cent interest but this is only available for three months. A simpler savings account is offered by Wio Bank which will pay you 3.75 per cent with no minimum amount or lock-in period. If you can lock your money up then you will get a higher interest rate – rising to 4.5 per cent.