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| Source: National Bonds. |
Findings indicate that 36% of UAE nationals save for a major purchase, while 34% save to buy a house and 24% save for retirement. However, only 7% save for their children’s education. As for other nationalities, 37% save to buy a house and 35% for retirement while 18% save for a major purchase and only 10% save for education.
In additional findings, 56% of UAE nationals said they make monthly payments towards personal loans, 32% are settling credit card debts, while 12% are paying off mortgages. As for other nationalities in the UAE, the survey found 50% of the respondents are paying off personal loans, while 38% make credit card payments, and 13% are settling mortgages.
The results also indicate that 20% of UAE nationals among the respondents usually save monthly, as opposed to only 11% of single UAE nationals. Additionally, 52% of UAE-based women from all other nationalities do not have an emergency fund, against 6% of female UAE nationals who do. Further, 17% of UAE nationals said they have takaful insurance, compared to 14% of respondents from all other nationalities said they do.
Mohammed Qasim Al Ali, CEO, National Bonds Corporation, said: “Five months since our last financial health check, we are observing a major shift in our savers’ financial behaviour. We are happy to note that saving for retirement and homes is gaining precedence among customers of all nationalities. However, debts due to personal loans and credit cards remain the biggest challenge. We at National Bonds are well aware that bad habits die hard. This is why we offer a comprehensive financial planning strategy that helps customers achieve a balance between their needs and wants, their budgets and liabilities.”
Highlighting the low numbers of savers with takaful insurance across all nationalities including UAE nationals, Al Ali explained: “The significance of takaful does not only lie in being a means of protection against an uncertain future incurred through job and income loss. It serves as an expression of social and Islamic culture - reflecting its inherent values such as cooperation, solidarity and partnership even while ensuring a safe and sustainable future for all segments of society without discrimination.”
Takaful can also be a key to resolving the problems relating to Emiratisation policies in the private sector, where the advantages are less compared to the public sector. Thus, takaful is an effective alternative that provides financial security to the employee and his family. Takaful insurance is also expected to be one of the main drivers for financing development and ensuring stability of the financial sector.
The CEO of National Bonds also highlighted the debts paid by the majority of savers against personal loans and credit cards and said: “Despite the increased awareness today about the importance of savings and the burden of debt, the credit card culture continues to weigh heavily on many people, draining their income and severely impacting their financial security and the future of their children. The issue of debt is more related to habit than need if we consider the high income levels of individuals and consumption trends in society. This habit is reinforced by excessive consumption associated with earlier economic phases, but the same habits may not be appropriate for the upcoming economic phase if recession and its related challenges continue to adversely impact the global economy.”
National Bonds has created a number of innovative tools to encourage regular saving among bondholders. Of these, the new myPlan Rewards Program launched in August 2015 with the aim of encouraging customers to commit to a monthly savings plan is gaining popularity among bondholders that are mindful of the challenges they might face in the future.
National Bonds advises that financial plans should cover more than just investments, including retirement, taxes, insurance takaful, cash flow and debt management.
*Designed by financial advisors at National Bonds, the financial health check was launched in February 2014 as an online tool to help customers assess their financial status and take corrective action towards achieving a more resilient financial future. To date, the survey has received responses from more than 1,000 customers across cultures and nationalities. Respondents fall within the 26 to 40 age group.