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Mon 16 Dec 2013 02:06 PM

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UAE's poorest 'saving more than everyone else'

Gulf state’s low income workforce is putting aside more cash compared to higher earners - index

UAE's poorest 'saving more than everyone else'
Mohammed Qasim Al Ali, CEO, Nationals Bonds.

The UAE’s most poorly paid workers are managing to save more every month than their higher earning counterparts, a report showed.

According to National Bonds’ Savings Index 2013, 31 percent of individuals surveyed earning AED3,500 ($952) per month or less claimed they were regular savers, which was two percentage points higher than the rest of the community.

In addition, 37 percent of low-earners believed that their savings were adequate for their future requirements, compared to just 13 percent of respondents across the UAE as a whole.

A quarter of earners in this bracket also said that they planned to raise the proportion of their wages that they save every month.

“The low-income earners here have their families back in their countries and this puts pressure on them and makes them spend less than in the UAE,” said Mohammed Qasim Al Ali, CEO, National Bonds, during a press conference in Dubai. “Their lifestyle is completely different to the people with higher incomes.”

The index, which in its third year and for the first time included low-income earners in 2013, found that only 10 percent of those in the low income bracket who were not currently saving planned to start doing so in the next 12 months.

Of the 73 percent of this demographic who currently use remittance services, the most popular were exchange houses (used by 63 percent), followed by banks (used by 15 percent), or a combination of both (used by 22 percent).

The index found that among the higher earners in the Gulf state, 22 percent said they were saving less than last year, with respondents expressing concern about rising inflation, fuelled by increases in rent, education and grocery costs.

Al Ali said that a mentality of saving was developing in the UAE, but called for more education for the country’s youth on the importance of financial planning.

“We have this mentality of living day-to-day. We should address the root cause of this problem as a young age,” he added. “I think these people should be offered financial awareness programmes.”

The index took into account the saving and spending habits of more than 1,700 GCC citizens and expat residents.

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Oldtimer 6 years ago

And to think that local policies are framed seeing the net amount remitted overseas.......!!! The authorities should realise that the vast majority of middle and low income people who send their meagre but regular savings to their families do not have a lot of disposable cash in hand. The high net worth individuals do splurge on high end consumer items and contribute to retail business. There is also a large section of average middle income families, who try to emulate the life style of the rich using multiple credit cards and consequently are heavily in debt.