UAE residents are not saving enough money for their future amid concerns about the rising cost of living, outstanding debts and a lack of savings culture, the CEO of National Bonds said.
National Bonds, the Dubai-owned Islamic savings scheme, said it had seen a “slight increase” in its 2012 savings index, which measures saving sentiment in the Gulf state, but said the vast majority of residents still do not save enough.
“A lot of people, unfortunately, in this part of the world, they live pay cheque to pay cheque and that needs to change,” said Mohammed Qasim Al Ali. “We cannot work alone; the government intuitions have to play a role [and the] education system has to play a role.”
The Dubai-based savings scheme saw a 3.4 percent increase in the number of people buying its bonds in the first half of the year compared to the previous year.
Initiatives aimed at improving spending habits such as a workshop for Emiratis whose debts were recently settled by the UAE government helped boost the appeal of savings schemes such as National Bonds, said Al Ali.
“Usually the strength of the economy depends on how the saving sentiments are in that country. I think the UAE government has already paid attention to it, we have seen it conducted through workshops.
“[Savings are] part of building up the foundations of the economy, it sits on the savings of people; it’s another way of boosting the liquidity in the economy,” he said.
National Bond’s 2012 index, which amalgamates the answers to three questions – about a person’s savings potential, the savings environment and their own financial stability into base values – increased 2.8 points to 101.8, up from 99 in 2011.
But while the index indicates a small rise in the number of people planning for the future, the number of residents not saving remains high. Nearly two thirds (65 percent) of those polled said they do not save regularly, a six percent increase compared to the previous year.
The majority of the 611 residents (87 percent) polled said they do not believe their current savings are adequate for the future while just 1 percent considered their savings “more than enough” for the future.
Residents cited the high cost of living (44 percent) and debts and loans (38 percent) as the biggest reasons for not saving.
Sentiment towards saving for the future dropped among Emiratis, Arab expats and Asian expats but increased among Western expats while savings for retirement, children’s education and for the purchase of property all ranked in the top three priorities for all nationalities.
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