All of us aspire to create the right amount of wealth and manage our finances in a better way. However, these things seem too complicated when it comes to practice. There is not enough knowledge sharing about the subject - how money works.
In the UAE, financial literacy is an issue and the world in general as well. A recent study says, only 38 per cent of the adults in the UAE are financially literate. If we consider the UAE’s robust position in the global economy, the gap in financial literacy can be allocated to the fact that the country is relatively new. It is urgent to address financial literacy for the millennials, who make up nearly 36 per cent of the UAE’s population. Millennials have emerged as inheritors as one of the most significant intergenerational wealth transfers equal to $17 trillion or 10 per cent of the world’s private wealth.
“A combination of awareness, knowledge, skills, attitude and behaviour necessary to make sound financial decisions and achieve individual financial well-being ultimately,” the Organisation for Economic Cooperation and Development has defined financial literacy.
It’s all about developing functional proficiency in core money skills that are essential in managing our future financial aspirations and needs. Unfortunately, the world’s existing education system enables us to become professionals, and it does not equip us with business management skills, which are essential for managing money for both present and future. There are things which are left to be figured out on our own.
To make ourselves more financially secure and empowered, we need to follow these few things
Set your goals
It is essential to know where you’re going, and setting your financial goals is the first big step if you want to get somewhere. Your saving potential shall be determined by analysing your income and monthly expenses. Everybody has our very own aspirations. The key to setting financial goals is to align our expectations with our money. Once you have placed your goals, it is time to make a budget and stick to it.
Think about passive income
Making passive income means making your money work for you, which is one of the most critical aspects of financial literacy. Your dough should be invested in the right place for it to be able to give you favourable returns. Before investing, you must know your appetite for risk. Mostly, high-risk investments have the potential for higher returns, while lower-risk instruments offer lower but guaranteed returns. A reputed financial planner would be of great help to get your investment portfolio started. You shall start small and build a diversified portfolio gradually over time.
Consider Real Estate
Real estate can prove to be one of the most prudent investments. Everything has ups and downs; in the long run, it almost always pays off. There are two ways in which we can look at real estate as an investment - buying a house or buying an investment asset. When you own your home, you never have to pay rent again. When you buy, it is an asset, and it serves as a great source of passive income.
Investment is an excellent thing in real estate. If there are any plans to purchase a property, the banks will lend you money. Moreover, the rental returns can give you double-digit return on investment over time. When you're looking forward to investing in real estate, you must consider credible and well-known developers who can guide you in terms of entire process.
Real Estate Accounting
Managing your finances requires determination and discipline. Make sure you are developing the land you’ve funded. To generate more revenue from your asset is your call. Bookkeeping and recording tasks can be very tedious because there are significant numbers of state regulations and countless transactions. It would be best if you manage your real estate accounting books accurately.
Application of Real Estate Accounting
Real estate accounting is used for property management. When you work in real estate, you deal with large sums of money, and it is essential to understand how to manage these transactions.
Are you familiar with real estate accounting? You must:
- Run a real estate agency
- Handle the accounts of a housing association
- Provide residential sales
- Manage real estate for clients
- Run a building construction firm
- Manage an investment trust
To have a better understanding of your business and managing your books, allows you to deal with real estate accounting properly. You can see if you’re making a profit and which properties are performing the best in the market. Along with that, you need to compare year-to-year growth. You should know how much cash you have on hand and prepare yourself with the tax return, and pay bills on time.
It is sometimes challenging to set aside time for managing bookkeeping. Real estate accounting and property management go hand in hand for keeping up with financial records and seeing growth opportunities.
Who we are
If you are thinking about where you can get professional guidance in Finance and Managing Real Estate Accounts, JAXA Chartered Accountant can be the best choice for you. We have experts who can help you with accounts and bookkeeping. The professionals are well-versed with the UAE Accounting Laws and Regulations. To get into further details, contact us today - we’d be glad to assist.