Was 2015 a better year for savings? This is what UAE residents think…

Western expatriates are the most committed to regular savings

Sharia-compliant National Bonds Corporation recently released its 2015 Savings Index findings, which shows an increased 30 per cent of the respondents in the UAE regarded last year 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.

The report was based on a survey conducted among 2,000 respondents in the GCC region.

The survey aimed to gain feedback on three key areas - financial stability, potential of saving and existence of an enabling saving environment in their respective countries. Out of the total sample size, nearly 700 comprised UAE residents of Emirati, Arab, Western and Asian nationalities.

Financial stability

In key outcomes, the UAE results indicate a significant increase in potential for saving and an overall positive outlook on financial stability in the nation.

More specifically, 84 per cent of the respondents in the UAE admitted to being financially stable.

Only 6 per cent of the respondents said they do not have any saving plan yet, while 50 per cent of UAE nationals and 65 per cent of Asian expatriates said they plan to start saving, and 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.

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.

Culture of saving among nationalities

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 1-6 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, CEO, National Bonds Corporation, said: "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. 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. 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?"

He added: "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."

Further, Al Ali explained: "The National Bonds Corporation Index helps people understand the social and economic situation of different segments of our community. We believe such clarity will eventually help a lot more people to improve future planning and review their financial behaviour in light of the economic and social changes. I am also glad that the gap between financial reality and the savings behaviour of a majority of UAE residents is growing smaller. Among savers, 87 per cent save on a monthly basis and 63 per cent of credit card owners did not charge more on their cards in 2015. Additionally, 64 per cent of the same group pay their card debts every month."

Regarding the addition of a section for takaful coverage to the 2015 savings index, the CEO said: "We were keen to know how many people in the UAE opted for takaful coverage. The findings interestingly revealed that 90 per cent of the respondents did not. This validates our strategy to design an integrated savings product that includes takaful coverage."

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