People in the UAE not saving enough: survey

Dubai: One in four Emiratis do not save at all and three out of four people in the UAE do not save on a regular basis, a survey commissioned by National Bonds Corporation reveals.

The findings of the survey, which was conducted by market research company YouGov Siraj, revealed much about the financial behaviour of the people in the country, a spokesman for the National Bonds Corporation said.

Mohammad Qasim Al Ali, chief executive officer of the National Bonds Corporation told Gulf News on Tuesday that a large portion of the population did not believe they could save because they lived from paycheque to paycheque.

One reason behind that was that many people don't know how to budget their finances, he said.

"There's a lack of infrastructure when it comes to the savings culture," he said.

The UAE needs financial awareness at all levels — in schools, universities and the workplace, he said.

"People have to realise the more they save, the better they can live," he said. This could mean sending their children to a better school or moving to a better house, he added.

However, in a country where consumers are tempted to reach for their wallets with so many promotions and sales, saving money is not easy, even for those who try to do so.

The survey had also shown that 70 per cent of those who did save said that last year their savings had not gone to plan. "People need to discipline themselves," Al Ali said.

"If they have the intentions [to save], it has to be followed by an action plan." Al Ali said such an action plan included having a savings account, using a debit card, and using the tools that forced you to deduct savings money from your salary before you even received it.

National Bonds, which is regulated by the UAE Central Bank, says it provides a Sharia compliant savings scheme. Last year it announced an annual profit of 3.54 per cent. Al Ali said they were confident that this year's annual profit would be as high.

While 23 per cent of Emiratis did not save, Emiratis were the most optimistic about the UAE's saving scenario, the survey showed.

Al Ali said that much of this optimism went back to the government's assurances which played a vital role in making the sentiment positive. "But at the same time, you have to be cautious. You have to prepare yourself in case things go wrong," he said.

The break-up

Western expatriates (38 per cent) comprise the largest population of those who saved on a regular basis, followed by Asian expatriates (31 per cent), Emiratis (23 per cent) and Arab expatriates (19 per cent).

Al Ali said that much of this discrepancy between the nationalities is due to cultural differences. For instance, Emiratis did not worry about "leaving their cars behind or supporting a family back home," he said. "We are a bit spoiled because we have the support of our government and our families."

Steve Gregory, a financial adviser in Dubai, agreed that many of these habits were cultural. "People in the West tend to save more although they have some kind of security back home," Gregory said.

"Nonetheless, they want to prepare for their retirement and they expect to commit 20 per cent of their salary for savings." However, it is a simple equation. "Without disposable income you can't save and if you are over-committed and you're not budgeted to save, you won't save," Gregory said.

The reason why it had become harder to save was because the crisis had caused people to lose jobs, take a salary cut or accept a lower-paid job, he said. So people's primary concern became "How can I reduce my debt as quickly as possible and stop servicing it?" rather than "How can I save on a regular basis?"

The good thing though was that rents have fallen. For example, "If you're renting you have more disposable income than you had before," he said. The reduction in rent made money easier to manage as well. "We are witnessing that businesses are getting busier and people are getting back on their feet," he said. "Where we are now is at a much better stage than where we were last year. I'm sure the people have learned from it [the financial crisis]."

Al Ali said that being able to save money was a mental challenge. "Savings cannot be built overnight," he said. "People have to challenge themselves to see whether they have control of their finances. If they do, they will become savers and if not they will become borrowers."

Confidence perks up

Consumer confidence appears to be stable in the UAE following a trough at the end of last year, according to the latest Consumer Confidence Index (CCI). The Consumer Confidence Index, a quarterly survey conducted by the Middle East's job site Bayt.com in conjunction with research specialists YouGov Siraj, found the UAE increased by a slight 0.5 point since last June.

This increase was the lowest recorded across all countries since June, 2010, with the highest being Kuwait which saw an impressive rise of 6.3 points. However, Lebanon which last quarter recorded the largest increase, , has seen a drop of 2.3 points.

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