News Column

Don't squander away early salary cheques

July 25, 2014

Tariq Al Haremi



Our Correspondent



Muscat: Consumers are advised to be careful while spending their early pay cheques on the occasion of Eid Al Fitr.



Over-spending is often seen when the Eid holidays are approaching and people receive advance salaries for buying Eid gifts.



It is natural for a person to spend a lot of money during Eid, but spending judiciously is the true test of one's common sense.



The workforce in both the private and public sectors should spend their wages carefully, since they will not receive another pay cheque until the end of August. With Eid on the brink of exploding with festivities, the public should not splurge.



"It depends on the person and the amount of money he's making. He will have to spend a sum for his necessities.



"Now, the true test is how he is going to spend that money, and have enough for rest of the month," said Bader Al Aghbari, manager of the banking operations department at Central Bank of Oman.



"Even though some people are smart in how they spend their money, they still end up being broke before the end of this month and will resort to taking out loans to prepare for Eid."



Credit cards may cost you 12 per cent interest

"This process educates people on how to save money and prepare for the Islamic holiday."



"In my experience, you must split your salary. Some goes for your living expenses (bills) and other money for leisure," added Al Aghbari.



Further, Mohammed Sajid Khan, Head of Business Development - Education, Middle East of ACCA said, "The news about the long Eid holidays, along with receiving salaries early, has indeed added to the joy at the advent of the celebration. á



"However, to maintain this delight, even after Eid and during the course of next month, it's important for us to do some personal financial planning in order to avoid over-spending and being left with little or no money for essential monthly and day-to-day expenses."



"I would suggest that we set aside an appropriate amount based upon our monthly expenses, which necessarily includes rent, instalments, school fees, utilities (electricity, water and internet bills), groceries, remittances and other financial commitments," added Sajid Khan.



"Although these expenses may be payable later this month or early next month, setting an amount aside for these expenses will give us an idea of what we can comfortably spend to celebrate Eid and to enjoy the holidays following Eid."



Before the Eid holidays, families go on a shopping frenzy to buy new clothes and prepare for the Eid Al Fitr holiday, and receiving the salary makes it a bit difficult. "You know this day is coming, so why don't you prepare two or three months before the holiday?" asked Mohammed Al Habsi, chief manager correspondent banking, Bank Sohar.



When asked about advice about spending wisely, he said that people must try to avoid the temptation to buy things they want, but do not need, for something they need but do not want and, in return, they will be able to enjoy Eid and beyond until they receive their next salary cheque.



"If you want to buy clothes for your kids, you could buy the item three months before Eidů The child won't grow so much so the clothes won't fit him. You don't need to show off, the previous styles will always come back," said Al Habsi.



Also, some people resort to using credit cards, as they find it easier to make purchases, rather than use their salaries.



Negligent spending

"Credit cards are double edged. They are great for emergencies and for important spending purposes. However, if they are used in a negligent way, you'd have to pay around 12 per cent interest for every item you buy," warned Bader Al Aghbari.



Additionally, when credit cards exceed their spending limits, customers are required to pay back the credit amount, along with the assigned interest rate, which could range from 7 to 18 per cent, or even more. With Eid Al Fitr just around the corner, the joy and celebration of this holiday may tempt locals and expatriates alike to spend large amounts of their salary, but it is strongly advised by experts to take cautious measures and not overspend.


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Source: Times of Oman


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