It's time for brutal honesty

Gary Clement for The National

This may not seem like a difficult question, but sometimes it can be hard to face the truth - even for the best of us.

Here goes: how much money do you save every month?

Can you answer immediately, or are you suddenly feeling a little uncomfortable or guilty? Are you stalling for time to think of a random amount or even to come up with an excuse as to why you are not putting away at least 10 per cent of your salary every month?

Or perhaps you can't afford to save anything at the moment.

It's actually harder than you think, right?

A few years ago, I sat down with my wealth adviser who proceeded to ask me a lot of hard questions about my money and what I did with it.

It was an uncomfortable experience because I didn't like talking about my financial situation with anybody, much less admitting I'd wasted a lot of money - and time that could have been better spent saving - over the years.

Her aim, of course, was not to make me feel uncomfortable. Although at times, it was almost as bad as getting a tooth pulled.

But to come up with the best savings plan for me, she needed to pinpoint exactly how much I spent (to the last dirham) and how much I had left over every month to put away into a managed savings pot.

She also wanted me to set goals, so spent a lot of time asking me what I wanted to do with my savings.

These questions included when I wanted to retire (it turns out I'll be working a lot longer than I want to - like most people these days); the lifestyle I envision as a retiree (a lot ritzier than I will be able to realistically afford thanks to the rising cost of living); and how I wanted to pay for my daughter's education (let's just say she will be working part-time to supplement her income at university; sorry, sweetheart, but I'm doing you a favour here).

Adding to my discomfort was the fact that I had been conditioned from an early age not to talk about my salary because it was considered impolite.

It's not like shooting the breeze with small talk about the weather or sport, my parents would say. Now I'm an adult, I can safely say they were right; it can lead to jealousy and morale issues in the workplace if somebody finds out who is earning what, especially if you discover the lazy colleague who sits in the corner doing nothing but surfing the net and tweeting inane thoughts all day earns more than you.

But back to my savings soapbox. Saving for the future has never been more vital than it is now. If there is one personal finance lesson to be learnt from the financial crisis, it would have to be that governments urgently need to implement a strong savings programme among the citizens.

Which brings me, of course, to the Emirates, where a lack of a savings culture has been the norm until recently. But a raft of programmes launched by banks, financial institutions and government bodies such as the Emirates Foundation for Youth are beginning to change our perceptions about the importance of smart-money management and savings.

According to the latest National Bonds Savings Index, 87 per cent of residents in the UAE do not believe their current savings are adequate for their futures.

The aim of the index is to look at our attitudes towards saving and spending money.

And while there have been some improvements in the way we approach saving in the three years since the Sharia-compliant savings scheme launched its annual index, many UAE residents still have a lot to learn.

On a positive note, however, National Bonds found 35 per cent of respondents were saving regularly. That's an encouraging 6 per cent rise from the year before and a 9 per cent increase from 2010.

But what is of concern is the respondents felt they had a shortfall in their savings, with just 1 per cent of residents saying their savings were "more than enough" for the future.

"While this year's index indicates there is still a long way to go, it has demonstrated to us we are predicting trends correctly … to support people with the right tools to make them regular savers," Mohammed Qasim Al Ali, the chief executive of National Bonds, said of the results.

It doesn't matter where you are in the world, saving your money will set you on a path of financial freedom that will pay off - literally - in the long run.

Talk to your company about setting up an employee savings scheme. Make an appointment with a financial adviser.

Most of all, be brutally honest with your money-management skills and where your hard-earned cash goes every month.

It's less painful than getting your tooth pulled. Honest.