25% of UAE residents don’t save even one dirham a month
dubai — The UAE residents should have a saving plan as early as possible to secure their future because nearly 25 per cent of residents don’t even save a single dirham from their monthly salaries, bankers and wealth manager said.
“Element of time is very important. People should start saving at a very young age,” said Dr Tariq bin Hendi, EVP and head of wealth products and advisory for retail banking and wealth management at Emirates NBD, at a panel discussion in Dubai on Tuesday.
“It is more important that how people manage their money, saving the money is not enough… If you don’t start planning now, it becomes much more difficult later. If you save regularly, then it is much more relaxed financial life 20-30 years down the line,” Bin Hendi said, adding that firstly “people have to make a conscious choice that they want to start saving now. And only then financial institutions like Emirates NBD, Emirates Foundation etc can help them.”
Highlighting the sorry state of financial affairs of the UAE residents, he pointed out that 38 per cent of adult are financially illiterate in the UAE with 68 per cent having no formal savings while 25 per cent don’t even save a single dirham from their monthly wages. More importantly, 94 per cent residents report feeling financial stress. “Debt is not bad but excessive use of debt is bad.”
Ambareen Musa, founder and CEO of souqalmal.com, said people were living beyond their means because getting credit was so easy a few years back before credit bureau came up because banks were not able to check how much people owe to financial institutions and also not knowing the financial health of the borrower.
“But there has been a massive change in the last 12 months and people are more financially literate now. People have realised that the cost of living is going up so they have started saving now. Also, the UAE is no longer the place where people come to live for 2 years and then leave. Now people are building families, homes and lives here on a longerterm basis,” Musa said.
Hussain Al Balooshi, programme manager at Emirates Foundation for Youth Development, highlighted that financial education is pretty important and the government has taken steps by adding financial literacy in the curriculum from grade 1 to 12.
“Financial education is very necessary in curriculum for the young people... We still think that the youth needs more information about financial literacy because we found that 70 per cent of them aged between 18 to 35 are struggling with their loans and credit cards,” Al Balooshi added.
Citing an example, he said some individuals carried up to 36 credit cards before the establishment of credit bureau because it was possible then and the government was also supporting by paying off their loans. “But I see this is coming to an end.”
Interestingly, he pointed out that many financial institutions in the country reward customers who are spending money but not those who are saving.
— waheedabbas@khaleejtimes.com