At the moment, the number of people saving in the Middle East is lower than those in the emerging markets of India and China*. In this environment, finding the incentive to save can be difficult. According to price comparison website, bayzat.com in September 2014, the average savings return was around 0.5 per cent across over 28 banks in the UAE which is reflective of the wider GCC.

Interest rates aside, it is important to view saving as something for the long term, helping you and your children to achieve future goals whether that’s further education, a deposit on a home, funding a wedding, or even travelling the globe.

Saving from an early age is a life decision you won’t regret. As a parent, contributing a small amount to a savings account on behalf of your children every month will help them to build a nest egg for the future.

When you hand these savings over, giving your children a degree of independence over how they manage their money will help establish good habits for the future.

What are the options?

For younger MENA citizens that want to save, the choice of options is currently quite limited as the market is still at the early stage of development.

But, for young people, a savings scheme is one of the best ways to get onto the savings ladder and offers a safe home for your money.

First and foremost, savings schemes can help support a youngster’s financial future. Parents can open a savings account or a savings plan for their children and empower them to manage it and control their money.

Online savings schemes are a good example of plans tailored specifically to help secure the financial future of the next generation’s savers. They are simple to set up and can provide instant control over savings with 24/7 online access. Importantly, often they can be started with just a single affordable contribution.

One of the key benefits of these schemes usually is that savers can change how much they contribute and when. For instance, if a child does a few more chores around the home for a bit more pocket money, parents can choose to increase the level and frequency of contributions.

In addition to simple savings options, some financial providers offer ‘easy to choose from’ investment portfolios based on risk appetite and whether the parent, on behalf of the child, wants access to global, regional or even Sharia-compliant investments. By being actively engaged with a savings scheme, parents will also have access to fund and investment ‘informational’ material, which can be used to help educate their children on the importance of long term financial planning.

Extra benefits

In addition to savings schemes, there are specific savings products which offer benefits such as discounts on retail stores, free cash cards, and easy access to online and telephone banking. This can be a big incentive for youngsters.

Some are also tailored for the likes of high school graduates and college students 17-24 years old, and include advice on student finance.

Room for improvement

A recent survey by Towers Watson found there is currently a low level of saving in the Middle East and North Africa (Mena) region highlighting significant room for improvement.

The research revealed that over a quarter (28 per cent) of respondents do not save anything at all, and more than half (55 per cent) save less than 10 per cent of their income: this may be due to the inclusion of Egypt and the Levant in the sample. However, when we look at only the GCC countries we still see this pattern: over a fifth do not save anything, and almost half save less than 10 per cent of their earnings.

For those that do save, over a third (34 per cent) favour savings accounts while 19 per cent save through real estate and other property investments and 16 per cent via bank deposits.

When it comes to the main motivations for saving, getting on the housing ladder and planning and funding a future marriage, are the main drivers for those aged 20-29 in the region.

For young people, saving a little and often is by far the best approach. With rising property prices and costs of education soaring, the younger generations face the prospect of some expensive years ahead. While the bank of Mum and Dad often ends up picking up the bill, encouraging children to get into the savings habit through saving schemes will certainly pay off over the long term.

The writer is the Chief Marketing & Communications Officer of TAKAUD, the region’s first long term savings and pensions business looks the options.