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Not saving enough? You’re not alone!

Study by HSBC reveals one in four people in the UAE save nothing

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The study found that 23 per cent of the UAE population has zero savings
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DUBAI; One in four people in the UAE aren’t saving a dime, a recent study by HSBC has revealed.

It found that 23 per cent of the UAE population has zero savings. Additionally, a third of the population (32 per cent) saves only up to 10 per cent of their earnings. That means more than half of the population saves only 10 per cent or less of their income (see graph).

The study was carried out to understand current savings trends and to offer retirement investment plans to UAE residents. It says that three out of four people aren’t happy with the fact that they save very little or absolutely nothing. The study says that 83 per cent of the people in the UAE would need higher salaries or lower accommodation costs to be able to save at least up to 10 per cent of their income. “A lot of people who I meet say home rent and educational expenditures eat up a large chunk of their income, especially in Dubai. No matter where you stay in the city, accommodation is very expensive. This is what makes saving for the future very difficult for most income groups,” said Komal V.K., personal finance adviser at Emirates Islamic Bank.

Remittance

The report also reveals that almost half (41 per cent) of the expat population prefers to send money back home as the interest rates are better in their home countries while only a fourth of the expats invest their money in the UAE.

According to long-time UAE resident Prem Chandra who has invested about Dh2.6 million in various real estate projects, the only way to save money here is to invest in property.

“You can’t keep all your eggs in one basket. That’s why I usually do a bit of both. I keep my money with banks in India, but in Dubai I invest in real estate, so I can save some money on the rent,” said the 46-year-old businessman. “It was a lot easier to save money in the UAE 10 years ago.”

Dr Jatin Malhotra, Professor of Finance at American University in Dubai, says: “It’s obvious that most of us barely save any money in this country, especially if you’re in Dubai. With VAT coming into effect a lot of people have pulled the strings on their expenses, but if the study was to be conducted at the end of 2018, the stats would be more alarming. I’d assume three fourths of the population will save less than 10 per cent.”

Saving tips

1.Develop a savings plan and stick to it: Put aside a set amount of money at the start of each month, but be realistic. Consider your main expenses and set yourself a realistic target.

2. Cut down on expenses: Ask yourself if there are any expenses that you can reduce or remove. For example, you could save money by bringing food to work with you, rather than eating out every day. Be frugal, try to save money by switching to cheaper brands.

3. Save any additional or unexpected money: Rather than spending your bonus on fancy items you don’t really need, immediately put the money into a savings instrument.

4. Have a “Buy Nothing Day”: Set yourself a rule that you are not allowed to buy anything unnecessary on one day of the week. This includes your morning coffee, and any impulse purchases – you would be surprised how much you can save this way.

5. Use coupons and discounts: Use coupons to save money. For example, the Entertainer app has a bunch of 2-for-1 offers that could save you a lot of money when dining out.

6. Shop around and compare: Don’t buy the first thing that you find. Do your research and compare multiple options to find the best deal. Open a savings account: Having a savings account is a great way to start saving. With a savings account, you earn interest but you also have the flexibility of immediate access to your money. You can also choose between AED, USD, GBP, EUR and RMB account currencies. Some savings accounts offer higher interest rates than a normal savings account, and if you do not need immediate access to your money and would like to earn a higher interest rate than a typical savings account, you could use a Term Deposit account.

7. Diversify your savings: Create your own portfolio from a range of funds like equities, bonds and specialist investments. Banks offer a wide selection of mutual funds and offshore investments and international bonds from the US, Eurozone, MENA and Asia.

8. Pension plan: If you don’t have a pension plan, sign up for one. Too many expats leave the UAE without any money set aside for their retirement.

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