Seven in ten UAE residents unsure how to achieve their financial goals

Seven in ten UAE residents are unsure of the steps needed to achieve their financial goals, a poll by National Bonds revealed on Monday, as the UAE investment company launched a new campaign to encourage better saving habits.

According to the poll of almost 400 residents conducted in the first nine months of the year, 69 per cent of respondents lack awareness about financial planning.

Despite the lack of clarity on how to save and invest their money, 53 per cent were most interested in receiving financial advice related to retirement planning. This was consistent among Arabs, Asians and Western expats, according to National Bonds, while Emiratis are more concerned with advice on financial health.

National Bonds is now calling on UAE residents to identify the personal challenges that act as barriers to savings, urging them to be share their financial excuses on social media using the hashtag #SavingsExcuse to win Dh100,000.

“We have long supported the Government’s ambition to increase financial literacy and savings to achieve a healthy and secured financial future for individuals and their families,” said Mohammed Qasim Al Ali, chief executive of National Bonds.

“Most people know they should be saving; the hard part is knowing where to start.

Mr Al Ali said the campaign “will help people identify what exactly it is that prevents them from putting money aside” and help them "overcome it".

National Bonds said many expats are lured to the UAE by tax-free salaries with every intention of saving each month, but their plans quickly get diverted as they get caught up in the lifestyle on offer.

The investment company hopes the initiative will instill a culture of saving across the emirates, helping residents realise that even a small tweak in their spending habits can make a difference.

While the tongue-in-cheek campaign could encourage some residents to take comfort in the fact that others are also failing to put money aside, savings experts said any awareness initiative is a positive thing.

Rasheda Khatun Khan, a wealth and wellness planner and founder of Design Your Life, said: “Hopefully it will at least get people to realise that they actually have an 'excuse' and not a reason.”

Ms Khatun Khan said the top excuse she hears is “my expenses are more than my income”. “Another common one is, 'I have nothing left at the end of the month,” she added.

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Steve Cronin, the founder of WISE, an independent community for financial education and support in the UAE, said:  “Seeing a list of creative excuses is more likely to prompt recognition (and maybe a flash of guilt) than give people comfort that nobody else is bothering to save.”

But Mr Cronin said  one of the main reasons residents fail to stash their cash is because they work hard and do not have time to deal with their finances properly.

“Saving requires discipline and the delay of gratification. No brain is very good at this, until it is made to realise that saving can be quite simple and even rewarding," he said.

“Living in the UAE sometimes feels like an alternate reality, where boring, real-life things like saving can be dealt with when they return to their home country. This is a huge mistake as expats have the best opportunity to set themselves up for their future while in the UAE. Other people have a 'head in the desert sand' approach and dare not think about the financial mess they are in.”

Mr Qasim Al Ali said the No.1 excuse he had heard was that a person's income was not high enough to save; examine their savings habits, he added, and you will find a different story.

"You will find they don’t have budgets, they overspend on unnecessary travel, food items, new phones, new cars – so it’s about those things that you are trying to alert the public about," he said.

"The main reason is that people have to be aware of the psychological barriers to saving. Unfortunately, not being able to save is a trap that people believe. It’s all about financial planning and why financial planning will always lead to savings and a happy retirement."

Financial expert Steve Cronin of WISE, offers his tips on kickstarting a new savings strategy:

• First get a grip on your finances and understand what is coming in and going out. Make yourself accountable to someone else, such as a friend or relative, to demonstrate you are making progress

• Google a few articles on saving tips, it takes less than 30 minutes to learn a lot about the basics

• Track what you spend and identify where you can make large or regular cuts to your spending

• Reduce your credit card balances as much as possible

• Set aside a specific percentage to save every month and get it into a separate account as fast as possible to ensure you cannot spend it easily

• Try to increase your savings percentage so you are saving more of your salary each month

• Learn how to invest your savings offshore in cheap and diversified ETFs (exchange traded funds)

• Don't let your sudden enthusiasm for saving get you trapped in an expensive long-term savings plan