Why UAE doesn't save enough?
The penny drops: rent, food bills, inflation, and 'the Dubai lifestyle' add up to residents saving close to nothing.
For most expats in the UAE, the bottom line - when they landed on the shores - was savings. A tax-free zone plus competitive salaries. Seemed like a win:win. But here's the twist in the tale: looking back at their stint in the land where pavements are, metaphorically, lined with gold, a KT online poll found 83 per cent Dubai residents do not manage to save enough, while 88 per cent say it's difficult to save in a high-consumption society.
"I save less than five per cent [of my salary] - and what is five per cent?" says Filipino national Mau Arevalo, a single mother, who sends 40 per cent of her salary back home for her two children, and her parents. Mau is a secretary at a trading company. She says even taxi and metro fares have gone up. Shopping for groceries also eats into the dream to save. "Last year, I used to buy a 1.5L bottle of cooking oil for Dh9. Now it's Dh13 or 14." She says, her salary hasn't increased, but the prices of things have.
Anna (name changed) has been living in the UAE since 1978 and working for close to 30 years. "It was possible to save until about a decade ago," she notes. "But today, 35 per cent of my salary goes towards rent, 35 per cent towards my children's education, 20 per cent towards groceries and daily expenses and close to 10 per cent for utilities and travel expenditure."
One might argue that Dubai's consumerist lifestyle is also to blame, but Anna says the family - which survives on a combined income of Dh15,000 a month - eats out just twice a month and shops only once a year before their annual trip to India. A pension scheme, therefore, is not even on the cards.
"How can I save for retirement when, at the end of the month, my account balance is practically zero?" asks the mum-of-three. "It's been 40 years, and we'd have loved to go back home for good, now that our youngest has finished her education too. But we have nothing in hand, so retirement will have to wait a couple of years more."
Canadian national and recruiter in Dubai for over a year, Dave Marosi says he thinks it's difficult to save in Dubai because the cost of living is what it is - much higher, he says, than London or New York. "There are lots of different factors why it's difficult to save. But the cost of living here is disproportionate to earnings." He believes rents burn the biggest holes in pockets. "Nowhere else in the world do you have to pay the entire year's rent in two cheques or four cheques."
Dave's friend Fraser Matthews, who's been in Dubai for a year, agrees with the cost of living theory, and that rent is the biggest culprit. "High utility prices and costly groceries don't help. In addition, eating out, drinks and activities are more expensive here than in London and New York."
Deeksha Sarkar, who works as a visualiser in an advertising agency, and who has been in Dubai for two and a half years, says that even though she does manage to save at least 20 per cent of her salary, "In Dubai, one feels lavishly poor." She, too, wishes rent were a monthly expenditure because then "the pressure would be divided." But the other factor she cites is the temptation to shop. "Everything is readily available - clothes, shoes, bags, and accessories, and when there's a sale, you want to spend."
Ambareen Musa, founder and CEO of leading comparison website in the Middle East Souqalmal.com, feels that "the transient nature" of society in the UAE makes it easy for expats to forget about saving. "Many expats feel they're only here for a few years, so they might as well make the most of it and worry about saving after they go home. But how many of us came here for 'just two years' and stayed longer?"
There is no 'right time' to start saving, she clarifies. "It's a culture one needs to learn from a very young age - and the best place to start is at home. My daughter is four and a half years old, but I tell her if she behaves herself, I'll give her a dirham; at the end of two weeks, if she's earned enough, she can buy herself a small present. It's not much, but they learn the value of money. My parents did it with me and I learnt two very important lessons: that you work to make your wealth - and how to live only on what you can afford, without spending what you don't have."
Turkish resident Efe Erturk is just 27 and works as a business intelligence executive in Dubai but says he consciously works toward saving "30-40 per cent of my salary" every month. He does this with a bit of careful budgeting: "Fixed costs like DEWA bills and rent stay the same; it's variable costs I watch out for. I often go out for dinner, for instance, but I have a limit that I don't go beyond. I also try to balance it out, so if I've spent more on going out to eat, I try to cut back on my shopping that month."
We have to think of the future, says Ambareen. "Savings are not only about getting old. They are also about emergencies that can happen to anyone at any time."