UAE residents are increasingly putting themselves at risk of debt by turning to personal loans or credit cards. According to the latest statistics, individual debt levels in the UAE are the third-highest in the region. 46.7% of the population—or 4.3 million people—have fallen into debt, while 12.8% are actively looking for a loan.

Lenders take into account potential borrowers' existing Debt-Burden Ratio (DBR) to evaluate their repayment ability and a DBR of close to or over 50% would automatically disqualify you from borrowing any further. However, what's unfortunate is that many of the borrowers struggling with debt in the country already have a DBR far above this limit.

Here are some tips to have a healthy banking lifestyle:

• Make cuts: Decide what lifestyle changes you should consider making to ease your debt burden. For example, a family that has two cars could sell one car and thereby eliminate additional costs such as insurance, fuel and servicing costs. Distinguish between your "needs" and "wants" and don't lose sight of your financial goals.
• Budgeting: Take a closer look at your financial statements and set yourself a monthly budget. Don't spend more than you earn, and keep a financial log to record your income and expenses. Tracking your records helps you better manage your finances and achieve long-term financial goals.
• Open a savings account: Set aside part of your income in an account that allows you to accumulate interest. A savings account can also serve as an emergency fund when unexpected situations arise.
• Make Investments: Leaving your money in a bank account does not yield any returns. Instead look to make small, affordable investments such as gold or mutual bonds that will help build your financial portfolio.
• Avoid "get rich quick" schemes: A good investment takes time and effort. Be alert to offers of quick and high returns in a short space of time. Learn to identify "pyramid" and "networking" scams. If it sounds too good to be true, then more than likely it simply isn't true.
• Look for deals: Resist making impulsive purchases. Do the bulk of your shopping during Dubai Shopping Festival, and be on the lookout for sales throughout the year.
• Debt consolidation: Combine all your existing loans and credit card debt into a single loan and take advantage of lower interest rates, longer tenures and smaller monthly payments.
• Be in control of your DBR: Your DBR is the amount of debt payment going out of your monthly salary. 50% is the legal limit in the UAE, so if you are on a salary of AED10,000 ensure your debt repayments don't go above AED5,000. Ideally, you want your DBR to be 25-30% to allow for times where you may need additional credit.
• Ask for advice: Financial literacy helps you make the right calls when it comes to what to do with your money. Consider joining a financial literacy or management seminar, and if you want to invest in the stock market or make any other type of investment, then don't be afraid to call your bank and seek expert advice.