Abu Dhabi Islamic Bank (ADIB) has launched its “moneysmart index” as part of its financial wellness programme
UAE residents are keeping better track of their money than four years ago, and fewer are living beyond their means, according to ADIB’s index.
The indexprovides fresh insight into trends related to financial wellness, including saving, debt management and investment. It is based on periodic surveys of 1,300 UAE residents earning over AED 10,000 per month, with the most recent study comparing responses with an unpublished benchmark survey in 2014.
The results help ADIB to deliver relevant advice directly to its customers where matters of personal finance are openly discussed between members, and volunteer experts.
In the most recent survey, 56 per cent of respondents said they “keep very close track” of their finances, up from 52 per cent in 2014, suggesting that people are being more careful about budgeting and managing their personal finances. Some 38 per cent said they had a good idea of how much they spend, but are not precise, compared to 37 per cent in 2014. And only six per cent said they paid no attention at all, down from 12 per cent in 2014.
In addition, 57 per cent of UAE residents pay their expenses every month and have some money left over, compared to 55 per cent in 2014. Some 40 per cent say they have little left after paying all their expenses, versus 36 per cent before. Fewer people are living beyond their means, with three per cent saying they spend more than they earn each month, compared to nine per cent in 2014.
Just over half - 51 per cent of people – say they save most months, compared to 24 per cent in 2014. But the proportion of people who say they never or rarely save has dropped to five per cent from 14 per cent in 2014.
More people with debt are finding it difficult to manage, with 48 per cent saying they “sometimes struggle” to make monthly installments, compared with 31 per cent in 2014.
The survey found that bank consumers are not aware of the rates that they are paying. For example, 59 per cent know the rate on their personal finance and only 55 per cent know the rate charged by their bank card.
The survey clearly shows that what people are doing with their savings is changing. More people are keeping their savings in the bank, while other investment options have become less popular.
Nearly half of respondents (46 per cent) said they kept their savings in cash or deposits, up from 39 per cent in 2014. There has been a big drop in people investing in their own businesses – 28 per cent of savers, compared to 56 per cent previously; 24 per centof people are putting their money into real estate - 16 per cent in publicly traded shares and nine per cent put their savings into mutual funds.
The three most cited reasons given to save are for emergencies (58 per cent of respondents), home ownership (44 per cent) and children’s education (41 per cent). In addition, 40 per cent said they saved for retirement and 36 per cent said they saved for holidays.
The survey found that UAE residents value financial advice most for how to plan for life events, how to build savings and planning for retirement. People tend to seek many sources of information, with face-to-face advice favoured by most, but blogs, websites and apps gaining ground.
Banks are the preferred source of financial advice, with 25 per cent of people saying they were “very likely” to use them, followed by family and friends, with 22 per cent. A reputable online community was the third-most favoured source, with 21 per cent said they were very likely to access advice in this way.
Self-help books, personal finance websites, and newspapers were also cited as useful sources, while certified, independent financial advisers were only chosen by seven per cent of respondents as their main source of advice.