Dubai: Most people in the UAE run the risk of having serious money problems because they don’t plan financially for the long term, a study revealed.
Proper planning is said to be the key to a bright future. It helps ensure that a person will achieve his goals in life, be they buying a new car, sending a son to university or retiring well.
In a study involving more than 600 people in the UAE and other countries, a financial advisory firm found that eight out of every 10 people who do not have a financial adviser only manage their finances for the short term.
Financial experts found the trend, which cuts across income brackets, ages and nationalities, alarming because it only implies that most people are not ready to face life’s financial challenges for the long run.
“It is alarming as longer term planning gives people more opportunities and more time to reach their ultimate financial objectives — which for most of us is financial freedom. The earlier you start your financial strategy, the easier the journey to your financial goals will typically be,” said Nigel Green, deVere Group founder.
The survey was conducted among a total of 654 respondents, ranging from middle-income earners to high-net worth individuals based in the UAE, UK, US, Spain, Germany, France, South Africa and Japan, among others.
When asked if they typically plan their finances one or more years ahead, 82 per cent of the respondents contacted by deVere Group said they only plan one year in advance.
The findings support other studies that highlight the trend of short-term outlook in financial planning. Insurer Aviva recently found that a significant number of pre-retirees in the UK are raiding their savings just to keep up with debt repayments.
Data collated in the UAE also suggest that expatriates in the country are not confident they will have enough funds to dip into when they get older.
Steve Gregory, managing partner at Holborn Assets, said the key to having a stable financial future is planning not just for the short term but also for the many years ahead. He noted that certain things in life, such as a stable career or having a baby “are meant to be long term.”
“Money needs time to grow, and short-term goals are useful, but so too are long-term goals,” he said.
“My son has more money in his pension plan than 80 per cent of people in the UK today. The reason is that he started his plan 20 years ago. Even though he has seen peaks and troughs with the underlying assets, he has managed to catch all the up sides, as well as down sides over a 20-year period. And as his salary has grown, he has been able to put away increasing amounts each month,” he added.