UAE residents are keeping better track of their money than they were four years ago, with more people being careful about budgeting and fewer living beyond their means.
According to the latest Moneysmart Index launched by Abu Dhabi Islamic Bank (ADIB), more residents are also keeping “very close track” of their finances compared to a few years ago and more are saving.
The index, which is based on surveys of 1,300 residents earning over Dh10,000 a month, showed that 56 per cent of respondents were very cautious about their finances, up from 52 per cent in 2014. Just 6 per cent of respondents said they paid no attention at all to their spending, down from 12 per cent in 2014.
The risk-averse attitude comes amid slow economic growth in the UAE and tighter liquidity that have resulted in lower consumer spending. The International Monetary Fund (IMF) put economic growth in the UAE in 2017 at 0.5 per cent, with projections for 2 per cent growth in 2018. In comparison, economic growth rates in the UAE in 2014 were at around 4 per cent.
Cost-cutting measures in the past two to three years by many companies and job cuts are also making residents more cautious about their spending habits.
The survey by ADIB showed that 51 per cent of people save most months, compared to 24 per cent in 2014. The proportion of people who said they never or rarely save fell to 5 per cent from 14 per cent in 2014.
“It is encouraging to see that more people in the UAE are looking more closely at managing their finances and savings. However, it is clear that people would benefit from debt management advise,” said Philip King, global head of retail banking at ADIB.
In terms of debt, survey results showed that more people with debt are finding it difficult to manage, with nearly half of respondents (48 per cent) saying they “sometimes struggle” to make monthly instalments, compared with 31 per cent in 2014.
Bank consumers are also not aware of the interest rates they are paying. Around 59 per cent of respondents said they know the rate of their personal finance services.
Residents’ habits with regards to savings were another element that saw a change compared to a few years ago.
More people are keeping their savings in the bank, while other investment options are becoming less popular. Around 46 per cent of the survey respondents said they kept their savings in cash or deposits, up from 39 per cent in 2014.
Additionally, there has been a decline in people investing in their own businesses, with 28 per cent of respondents saying they do so compared to 56 per cent previously.
Other indices have also noted similar financial attitudes among UAE residents.
The latest Consumer Confidence Tracker by yallacompare, a comparison website, found that almost half of UAE residents are less confident about their financial health than they were a year ago. In the first quarter of 2018, findings by yallacompare showed a general lack of confidence around job security and the ability to keep up with the cost of living.
This was leading residents to save rather than spend, to pay down debts, and to become more financially prudent.
Source: Gulf News