Electrician in Abu Dhabi earning Dh2,500 a month receives Dh1m windfall

Nagendram Borugadda, an electrician from India, won Dh1 million ($272,294) in an April draw by Sharia-compliant savings and investment company National Bonds in a reminder that financial security is attainable for everyone, regardless of income level. Mr Borugadda, 46, who came to the UAE in 2017, does not plan to quit his job in Abu Dhabi. “I came to the UAE for employment and don’t intend to stop working now. I started saving Dh100 [$27] each month with National Bonds from 2019. It was automatically deducted from my salary ,” he says. “I used to withdraw my savings as a lump sum while going back home on holiday. I usually withdraw between Dh1,000 and Dh1,200 while going on annual leave and they add Dh50 as a gift." Mr Borugadda, originally from Gullapalli village in Guntur district in Andhra Pradesh, says he’s from a poor family and will use the windfall to build a house and secure his children’s future. He earns a monthly salary of Dh2,500, from which he sets Dh500 aside to pay for food and sends the remaining amount home. He also saves 10,000 Indian rupees ($119) every month for his daughter’s wedding. His wife, Nalini, also works in Abu Dhabi as a housemaid to supplement his income. Mr Borugadda, who lives in a labour camp in Musaffah, plans to invest the money to secure his family’s future, but has yet to decide where to invest. By prioritising saving, even in small amounts, and exploring saving tools that offer opportunities to win big, residents across the UAE can take control of their financial future. Sixty-five per cent of UAE residents want to improve their knowledge of savings and investments, 44 per cent want to know more about budgeting and financial planning, and 38 per cent want to be educated on credit and debt management, according to Visa’s 2024 Financial Literacy survey last month. The UAE has introduced a number of financial literacy programmes. In 2019, the Central Bank signed an agreement with Emirates Foundation to launch a financial literacy programme through the Esref Sah scheme. The UAE Banks Federation also launched a financial literacy handbook in May 2018 in an effort to help consumers manage their money more effectively. The Emirates’ blue-collar workers account for a significant part of the workforce. Financial literacy is critical for blue-collar workers as this demographic often faces challenges, including limited access to financial education and resources. Enhancing their financial literacy can lead to better management of earnings, savings and investments, and reduce vulnerability to financial risks. The first options for low-income workers to save and invest in the UAE are interest-paying accounts or ones that don’t put the capital at risk such as National Bonds, recommends Keren Bobker, senior partner at Holborn Assets. Jay Adrian Tolentino, a financial coach, says: “National Bonds are safe, government-backed instruments that allow you to save money, starting with as little as Dh100 or Dh200, with the potential to earn returns. They also offer the chance to win prizes.” “Opening a high-yield savings account is a straightforward and low-risk way to grow your money. These accounts offer higher interest rates compared to regular savings accounts, which means your savings can grow faster. Look for banks or institutions that offer accounts with no minimum balance requirements or fees, making them accessible even for those with limited income. Emirates NBD Liv, Sarwa Save or StashAway Simple are great for this.” He also recommends robo advisers, such as Sarwa or StashAway, for low-income individuals to start investing with any amount they can afford. These platforms use algorithms to manage investments automatically, making it accessible even for those with no prior investment knowledge, he says. You can start with as little as a few dirhams, and the fees are generally lower compared to traditional investment services. This makes it easier for people to begin their investment journey without the need for significant upfront capital, Mr Tolentino adds. Ms Bobker warns it is important to make sure you fully understand where you are putting your money. “Read all the details before you sign anything. Particularly check for any penalties and charges to exit,” she says. “Be wary of any offers that claim to pay very high returns as they are usually a scam. Never borrow money in order to invest.” Flagging get-rich-quick schemes, Mr Tolentino says low-income earners are often targeted by groups that promise quick and easy ways to make money with no risks involved. Always remember, if something sounds too good to be true, it probably is, he warns. He also cites how many savings programmes in the market come with fees that can exceed 4 per cent, “which is incredibly high”. These fees can eat into your returns, especially as your investments grow. Always compare fees before committing to any savings or investment programme, he advises. The rule of thumb to investing when it comes to fees is to never pay anything above 1 per cent, he informs. “There are growing efforts to promote financial literacy in the UAE, but there is still a long way to go. The UAE Central Bank’s Financial Literacy Programme is a significant initiative aimed at educating residents on how to manage their money wisely. Additionally, some non-profits and private companies are stepping up by offering workshops and online resources focused on financial literacy,” Mr Tolentino says. “However, these resources aren’t always easily accessible to low-income individuals. To make a real impact, these efforts need to be more inclusive and targeted towards those who need them the most.” For Ms Bobker, she believes the low-income sector is not a priority for commercial companies as it is not very profitable. That means less time and effort is put into promoting financial literacy, she says, adding: “I’d like to see it as a genuine corporate social responsibility initiative from banks.” The first step for everyone is to build up an emergency fund. Aim for an amount that is equivalent to at least three months of outgoings, according to Ms Bobker. This should remain in cash but keep it in an interest-paying account separate to your daily bank account. Only once you have an emergency cash fund should you start looking at investing, she suggests. Mr Tolentino highlights how it’s important to change the way you think. “Your mindset is the foundation of your financial success. If you believe that saving is impossible, then it will be. It’s not how much you earn that will make you wealthy, but how you manage what you earn. Start by believing that saving even a small portion of your income is possible, and you’ll find ways to make it happen,” he says. “Understanding why you want to save and invest is crucial. Whether it’s for a secure future, to support your family, or to achieve a personal goal, having a clear purpose will keep you motivated and disciplined. “Break down your purpose into specific, measurable financial goals. These goals will give you a roadmap to follow and make it easier to track your progress.” Don’t be discouraged if you can’t save a large amount right away. Start with whatever you can afford, Mr Tolentino recommends. The habit of saving is more important than the amount you save initially. Over time, as your income grows, you can increase the amount you save. Setting up automatic transfers from your salary account to your high-yield savings or investment accounts makes savings easier and you remove the temptation to spend that money elsewhere, he suggests. “Create an intentional spending plan where you identify your needs versus wants and allocate your income accordingly. This plan will help you avoid unnecessary spending and ensure that you’re putting money towards the things that you value the most,” Mr Tolentino suggests. “Surrounding yourself with people who are also focused on saving and investing will encourage you to stay on track and make smarter financial decisions.”

Electrician in Abu Dhabi earning Dh2,500 a month receives Dh1m windfall

Nagendram Borugadda had been saving Dh100 from his salary with National Bonds since 2019