Recession reality check for your thirties

Maria has been working for various companies for more than a decade. She has travelled from the Philippines to Kuwait and then to Dubai, trying to earn a living. Now 34, Maria has no pension, insurance or investment.

Her three years of toil in Dubai has so far helped her raise Dh1,000, which is just a tad bigger than the monthly rent she pays for her small bed space in Satwa and not enough to cover a month's living expenses.

"That's not what you would call savings, because I will be sending that money soon to my family in the Philippines," she says.

Maria, who is still single, is eager to start her own family soon, but the financial demands back home, coupled with a rock-bottom salary, prove to be too great a hindrance.

She earns Dh2,500 a month as an administrative assistant in Dubai. About 40 per cent of her income is sent home to help younger siblings. Struggling to make both ends meet, Maria tries to make extra money on the side by selling mobile phone credit to her office colleagues.

"I'm living paycheque to paycheque. I barely have anything left for myself. It's not easy. My work contract will soon expire and I don't know if I'd still have a job in a few months," Maria says, her voice quivering as she starts to cry.

Maria is not alone.

A recent survey among 1,156 people in the United States showed that young workers are facing a harsh economic landscape, with seven in ten not having enough savings to cover two months of living expenses.

Many are finding it increasingly difficult to transition effectively into adulthood, consequently putting off plans to start a family or pursue professional development that would help them become financially stable.

According to the American Federation of Labour and Congress of Industrial Organisations (AFL-CIO), a voluntary federation, only 55 per cent of low-income young workers have health insurance while no more than 27 per cent have pensions or retirement plans. Many workers under 35 are also living with parents out of economic necessity.

Challenges

"Rising costs, coupled with less pay, fewer benefits on the job and fewer stable job opportunities, create a system in which traditional paths to adulthood are blocked for a growing number of young people," the study says.

In the UAE, a lot of people in their 30s are facing the same conditions. For many of the UAE's working expatriates, sending money home is part of the deal, so there is very little room for saving.

"Others are still repaying debts from university days…Others are setting up home for the first time in their lives and buying furnishing and paying rents in advance which causes them to be in debt," says Steve Gregory, director of technical services at Holborn Assets.

Paul Bromley, commercial director at Nexus Insurance Brokers, says many expatriates, regardless of their age, have also become complacent about financial planning because they arrived in the UAE with the promise of a tax-free salary and nice lifestyle.

"However, the reality, especially in the past year, is quite different, with people struggling with lower than expected salaries and higher than anticipated living costs.

"The under 35s, in particular, have a rose-tinted view of the world, having lived in relatively wealthy times during their youth, in an era that encouraged spending, while placing little emphasis on the importance of saving and financial planning for the future."

"However, the global recession has jolted many in this age group into financial reality — with job loss and lower salaries, it has become more evident that financial security is important. But, at the same time, it has become more difficult for many to save and invest in their retirement because of income cuts and redundancy," he adds.