Ninety-seven per cent of western expats in the UAE say they splash out on luxury shopping, far more than in Singapore or Hong Kong. Stephen Lock / The National
Ninety-seven per cent of western expats in the UAE say they splash out on luxury shopping, far more than in Singapore or Hong Kong. Stephen Lock / The National

Big earners, small savers?



An expatriate’s generous salary does not always come with the knowledge of how to make the most of that extra cash.

A recent Standard Life study on the saving, spending and investment behaviour of western expatriates across the UAE shows that while the country offers an ideal environment in which to live, work and save that many take full advantage of, just as many are looking to splurge on a better lifestyle.

According to the research, while 94 per cent of the 200 people surveyed said the spend the bulk of their disposable income on savings and investments, 97 per cent also admitted to splashing out on luxurious lifestyle choices. In comparison, luxury spending among respondents was much lower in Singapore – at 51 per cent – and in Hong Kong – at 47 per cent.

“Many western expats in the UAE come to live here because of the countless opportunities that this country has to offer, of which one of the biggest benefits is the tax free salary,” says Chris Divito, Standard Life’s chief executive for the Middle East.

“A tax free income provides a great opportunity which may lead to relatively higher savings and in turn allow expats to save more on a regular basis. We believe our research offers consumers a glimpse into their various savings and spending habits and creates an opportunity to revisit any financial issues they may have.”

However, the temptation to spend on a better lifestyle does not always factor in rising living costs, including higher rents, food prices, utility bills and school fees.

“We have been here for seven years now and our savings are minimal,” says Helen Flanagan, a British teaching assistant in Dubai. “The school fees are astronomical and the international package my husband receives now barely covers basic necessities. It seems we spend a lot more here on rent, schooling, food and utilities than we would at home. The UAE offers a fantastic lifestyle and a wonderfully safe environment for the children, but when it comes to saving as well, that is nigh on impossible.”

Financial advisers in the UAE say that keeping a detailed record of income and spending will typically show that a greater amount of money goes unaccounted for here than in other countries.

This usually goes towards socialising and family lifestyle choices and is the sort of spending that could instead be used to build savings.

Financial advisers say that education and improving one’s financial literacy can help people to maximise this money.

“It takes time for people to become accustomed to having the disposable income that’s on offer here in the UAE,” says Julia Olson, a senior associate at Holborn Assets. “Few people disembark a plane at DXB and will walk straight into a financial adviser’s office and ask for help in saving for their future. There’s often a big temptation to spend in the first instance. It is our experience that people are sucked into this lifestyle and then they become ‘savings averse’.”

Standard Life’s study shows a greater number of respondents seeking professional financial advice in Singapore (49 per cent) and Hong Kong (53 per cent) compared to the UAE.

There may also be industry obstacles to expatriates seeking more advice and help.

“The financial services sector in the UAE is a very lightly regulated realm,” says Andrew Prince, a financial planner at Acuma. “It does not give the industry a professional sheen when a person can have one job at the end of the week and be a financial adviser at the start of the next with little or no training. The same was true of the UK in the late 1980s and that caused huge problems.”

While the way the financial services industry is regulated may go some way to explaining why expatriates in the UAE are averse to looking for financial advice, the availability of credit cards and loans may be more relevant.

Personal loans to residents increased by Dh3.8 billion in June, the sixth consecutive month of increases, according to data from the Central Bank. It was the biggest monthly increase in the three years of Central Bank records. Total personal lending increased by Dh15.3bn in the first half of this year.

An online survey this year from compareit4me.com, a UAE-based price comparison website, polled 1,832 residents on their consumer finance habits and found that 20 per cent had made use of a credit card to cover repayments on a personal loan or car loan in the past six months.

“With an increasing number of UAE western expats paying off their financial liabilities, it is leading to greater strain on their long-term savings and investments,” says Mr Divito. “Financial stability is a key priority for expats, and it drives them to plan for their future, but at the same time our research has found that spending on non-essential luxury items is also a priority for consumers.”

Interest rates on UAE credit cards are higher than in many other countries and for other types of debt. The average monthly percentage rate on a UAE credit card was 2.9 per cent at the start of this month, equivalent to an annual rate of 41.1 per cent, according to data from souqalmal.com.

That compares with an average annual interest rate on personal loans of 6.1 per cent.

ascott@thenational.ae

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Engine: 3.8-litre twin-turbo V8

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Fuel economy 12.2.L / 100km

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Three stars

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Cryopreservation: A timeline
  1. Keyhole surgery under general anaesthetic
  2. Ovarian tissue surgically removed
  3. Tissue processed in a high-tech facility
  4. Tissue re-implanted at a time of the patient’s choosing
  5. Full hormone production regained within 4-6 months
Five personal finance podcasts from The National

 

To help you get started, tune into these Pocketful of Dirham episodes 

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Balance is essential to happiness, health and wealth 

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What is a portfolio stress test? 

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What are NFTs and why are auction houses interested? 

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How gamers are getting rich by earning cryptocurrencies 

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Should you buy or rent a home in the UAE?  

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UPI facts

More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions

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Investing success often hinges on discipline and perspective. As markets fluctuate, remember these guiding principles:
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Find the right policy for you

Don’t wait until the week you fly to sign up for insurance – get it when you book your trip. Insurance covers you for cancellation and anything else that can go wrong before you leave.

Some insurers, such as World Nomads, allow you to book once you are travelling – but, as Mr Mohammed found out, pre-existing medical conditions are not covered.

Check your credit card before booking insurance to see if you have any travel insurance as a benefit – most UAE banks, such as Emirates NBD, First Abu Dhabi Bank and Abu Dhabi Islamic Bank, have cards that throw in insurance as part of their package. But read the fine print – they may only cover emergencies while you’re travelling, not cancellation before a trip.

Pre-existing medical conditions such as a heart condition, diabetes, epilepsy and even asthma may not be included as standard. Again, check the terms, exclusions and limitations of any insurance carefully.

If you want trip cancellation or curtailment, baggage loss or delay covered, you may need a higher-grade plan, says Ambareen Musa of Souqalmal.com. Decide how much coverage you need for emergency medical expenses or personal liability. Premium insurance packages give up to $1 million (Dh3.7m) in each category, Ms Musa adds.

Don’t wait for days to call your insurer if you need to make a claim. You may be required to notify them within 72 hours. Gather together all receipts, emails and reports to prove that you paid for something, that you didn’t use it and that you did not get reimbursed.

Finally, consider optional extras you may need, says Sarah Pickford of Travel Counsellors, such as a winter sports holiday. Also ensure all individuals can travel independently on that cover, she adds. And remember: “Cheap isn’t necessarily best.”

Keane on …

Liverpool’s Uefa Champions League bid: “They’re great. With the attacking force they have, for me, they’re certainly one of the favourites. You look at the teams left in it - they’re capable of scoring against anybody at any given time. Defensively they’ve been good, so I don’t see any reason why they couldn’t go on and win it.”

Mohamed Salah’s debut campaign at Anfield: “Unbelievable. He’s been phenomenal. You can name the front three, but for him on a personal level, he’s been unreal. He’s been great to watch and hopefully he can continue now until the end of the season - which I’m sure he will, because he’s been in fine form. He’s been incredible this season.”

Zlatan Ibrahimovic’s instant impact at former club LA Galaxy: “Brilliant. It’s been a great start for him and for the club. They were crying out for another big name there. They were lacking that, for the prestige of LA Galaxy. And now they have one of the finest stars. I hope they can go win something this year.”

T20 SQUADS

Australia: Aaron Finch (c), Mitchell Marsh, Alex Carey, Ashton Agar, Nathan Coulter-Nile, Chris Lynn, Nathan Lyon, Glenn Maxwell, Ben McDermott, D’Arcy Short, Billy Stanlake, Mitchell Starc, Andrew Tye, Adam Zampa.

Pakistan: Sarfraz Ahmed (c), Fakhar Zaman, Mohammad Hafeez, Sahibzada Farhan, Babar Azam, Shoaib Malik, Asif Ali, Hussain Talat, Shadab Khan, Shaheen Shah Afridi, Usman Khan Shinwari, Hassan Ali, Imad Wasim, Waqas Maqsood, Faheem Ashraf.

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