More realising power of saving

Dubai - UAE residents also have overall positive outlook on financial stability of nation

There has been a significant increase in potential for saving among residents in the UAE, who also have an overall positive outlook on financial stability of the nation, a survey has revealed.
The 2015 Savings Index released by National Bonds Corporation shows that 50 per cent of UAE nationals and 65 per cent of Asian expatriates who took part in the survey plan to start saving. While just six per cent of the respondents said they do not have any saving plan yet, 21 per cent of Arab expatriates indicated no interest in starting a saving plan.
In the context of regular saving, the index has revealed that Western expatriates are the most committed to regular saving. Leading with 48 per cent, Western expatriates are closely followed by Asians at 44 per cent, while UAE and Arab nationals scored 28 per cent and 27 per cent respectively. Among those that save regularly, 87 per cent said they save on a monthly basis.
The survey, conducted among 2,000 respondents in the GCC region, including 700 UAE residents, aimed to gain feedback on three key areas - financial stability, potential of saving and existence of an enabling saving environment in their respective countries.
More specifically, 84 per cent of the respondents in the UAE admitted to being financially stable. Of the 63 per cent that expressed intent to increase their savings, 53 per cent comprised UAE nationals, 60 per cent were Arab expatriates, 86 per cent were Asian expatriates and 52 per cent were Western expats.
An increased 30 per cent of the respondents in the UAE regarded 2015 as suitable for saving, compared to 26 per cent in 2014. While 36 per cent of UAE nationals and 34 per cent of Asian respondents thought 2015 was suitable for saving, 35 per cent of Arab expatriates thought 2015 was unsuitable for saving, and 61 per cent of Western expats preferred not to answer.
Responding to questions on why 2015 was a good year for saving, 44 per cent of the respondents cited better available investment opportunities in the UAE. On the flip side, 45 per cent said that high living expenses and inflation were the main reasons that 2015 was not suitable for saving. Interestingly, 44 per cent of the respondents expected their income to increase in 2016.
On whether savings occurred in line with their 2015 plans, 69 per cent of those surveyed replied in the negative, while 74 per cent of Arab expatriates admitted to saving less than planned compared to 70 per cent for Westerners, 65 per cent for Asians and 63 per cent for UAE nationals.
When questioned about the factors that may negatively affect their saving plans for 2016, 64 per cent cited residential rents as the main concern, 46 per cent mentioned service bills and 45 per cent chose education expenses.
The index also showed that 84 per cent of the respondents in the UAE thought their savings are not enough for the future, compared to 77 per cent in 2014. Of those that thought they were not saving enough, 74 per cent were UAE nationals, 78 per cent Western expatriates, 86 per cent Arab expatriates and 86 per cent comprised Asian expatriates. The 2015 National Bonds Index dedicated a segment for takaful. The findings showed that 90 per cent of those questioned did not have takaful coverage, while 42 per cent have conventional insurance coverage. Of those surveyed, 37 per cent have life insurance and 11 per cent have insurance against job loss.
The index also indicated a difference in the culture of saving among nationalities. Of all respondents, 77 per cent regard personal savings as very important. Yet, 47 per cent have only started to save during the last one to six years. While 35 per cent of Western expatriates started saving more than 10 years ago, 11 per cent of UAE nationals started during the same time frame compared to 18 per cent Arab expatriates and 17 per cent Asians.
Mohammed Qasim Al Ali, chief executive officer of National Bonds Corporation, said the survey findings indicated that the motivation to continue saving vary from the initial motivation to start saving.
"Regular savers have a clear understanding of their priorities towards their families and the fluctuating realities of life. Therefore, they either commit their saving plans to cover the expenses of their children's education or provide financial security to their families," said Al Ali.
Those that do not save, however, may start saving as they worry about losing their jobs, face difficulties paying for their children's education or simply seek high returns on their savings, he said. "It is quite evident that understanding reality is the first step toward changing our status in life. The questions we need to ask is, 'do we have to wait for an emergency to start a saving plan?'"
"We are glad to note that 84 per cent of the respondents think their savings are not enough for the future, compared to 77 per cent in 2014. This indicates an increasing awareness of the importance of saving year after year, and that people's dissatisfaction serves as a high motivation to continue and grow their savings," said Al Ali.
- issacjohn@khaleejtimes.com