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What would UAE millennials do if given Dh5,000? Be frugal

Waheed Abbas/Dubai
Filed on December 3, 2020 | Last updated on December 3, 2020 at 11.44 pm

Study shows respondents spending wiser amid Covid situation

What would millennials in the UAE do if they’re are given £1,000 (nearly Dh5,000) by the government with no strings attached? Their answers have a lot of ‘interest’.

A new survey released by Standard Chartered bank has revealed that they will splurge less, thanks to Covid-19 making people more careful with their savings and spending.

Nearly half – 45 per cent – of those surveyed said they would use the money to pay off debt or cover day-to-day expenses while only 15 per cent would choose to spend it on a holiday, said the survey conducted among millennials, those aged 25 to 44.

Borrowings increased

Around one-third (34 per cent) of these millennials say that their borrowing has increased in the last month compared to 22 per cent of those aged over 45 to offset the impact of the pandemic, the survey said.

According to Standard Chartered’s study, three-quarters of people in the UAE — 74 per cent compared to 64 per cent globally — have found managing their money more difficult since the start of the Covid-19 outbreak. Millennials have found it harder than older generations, with 78 per cent finding managing their money more difficult compared to 61 per cent of those over 45.

Millennials in the UAE are 123 per cent more likely than those over 45 to feel they don’t have control of their bank balance, and 25 per cent more likely to have found meeting day-to-day expenditures, such as household bills, highly challenging.

Despite these significant challenges, many millennials remain in active pursuit of their long-term financial goals. In the UAE, 31 per cent of them are saving for a major purchase such as a new car or home, compared to only 25 per cent of those over 45.

“Keeping finances healthy during this pandemic has been a recurring topic globally, and based on our survey findings, this trend is still prevalent. However, our research is also showing that the pandemic is encouraging people in the UAE to think about saving and investment solutions,” said Sonny Zulu, head of retail banking at Standard Chartered UAE.

“In today’s world, there are several tools readily available to help young people manage their finances, but we believe that Covid-19 is going to place more pressure on the wealth management sector to innovate more solutions. Digital technologies to help youth manage their money, sustainable investment options and personalised value propositions will be the new focus for the industry, and this is a transformation we expect to see develop for decades.”

Using apps to control expenses

To meet these ambitions, millennials in the UAE are the generation most likely to want to better track and budget their spending (47 per cent). Around 51 per cent want to alter their daily spending and 28 per cent have started using a new money management or budgeting app since the pandemic began, with 64 per cent of those who haven’t planning to do so in the next three years.

They are also 63 per cent more likely to have started using a savings or investment app; 40 per cent more likely to have started using a money management or budgeting app; and 56 per cent more likely to have started using an online chatbot/robo-advisor for the first time during Covid-19.

Of those who have used new ways to manage their money since the start of Covid-19, the majority of people have had a positive experience. But while uptake of these digital tools has been fastest among millennials in the UAE, those over 45 are even more likely to have enjoyed using them.

This embrace of new technology to help manage money amid the current economic turmoil may be why people in the UAE are now more confident that they can achieve their long-term financial goals. Almost half (44 per cent) are more confident than they were before the pandemic started.

In contrast to the global average, where less people over the age of 45 feel confident in reaching their financial goals, those aged over 45 in the UAE are 24 per cent more likely than millennials to feel more confident in achieving their financial goals since the Covid-19 outbreak began.

— waheedabbas@khaleejtimes.com

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