Personal finance in the UAE: Residents track finances better but struggle with saving and debt

New survey finds only a quarter are saving and almost half are are finding it hard to meet debt repayments

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While UAE residents are keeping better tabs on their finances with fewer living beyond their means, saving and staying on top of debts is now a struggle, a new personal finance index from Abu Dhabi Islamic Bank has revealed.

According to the bank’s moneysmart index released on Tuesday, 56 per cent of residents “keep very close track” on their money, up from 52 per cent in 2014, while only 3 per cent are spending more than they earn compared to 9 per cent in 2014.

However, just under a quarter of respondents are managing to save every month, down from four in 10 in 2014 and almost half struggle to meet their debt repayments each month.

The poll surveyed 1,300 UAE residents earning over Dh10,000 with the responses compared to an earlier unpublished poll carried out by the bank in 2014.

“The key thing here is that people are becoming much more aware of the importance of keeping track of spending and saving,” says Philip King, the head of retail banking at ADIB. “And if they do, they have a better chance of staying out of difficulty. Importantly, if they keep track, they should be able to detect the early warning signs of financial difficulty.

“This could be having slightly less money left over at the end of the month, or starting to carry over payments for a bank card. When that happens, your first reaction should be to see where you can cut back on spending.”

The new personal finance barometer comes at a time when many residents are feeling the squeeze due to rises in the cost of living in the first quarter of this year. Statistics released in April by the Statistics Centre - Abu Dhabi found that consumer prices rose by 2.7 per cent in the first quarter of 2018 compared to the same period the previous year. And Central Bank of the UAE data released the same month, found that of the 7.168 million cheques worth Dh351.1 billion, handled by the UAE Clearing Cheque System during the first three months of 2018, Dh15.7bn worth bounced.

The UAE Banks Federation (UBF) has responded to squeezing household incomes by launching a new financial literacy handbook last month to help consumers manage their money more effectively and combat the rise of indebtedness.


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Rasheda Khatun Khan, a wealth and wellness planner and founder of Design Your Life says the rise in living expenses is forcing residents to examine how they spend.

“When VAT was introduced, the cost of goods and services did not only go up by 5 per cent but perhaps more than 10 per cent as some companies hiked their prices to cater for the administration expenses incurred by being VAT registered,” she says. “But as salaries have not increased in line with living expenses, many still find themselves struggling towards the end of the month.”

According to ADIB’s study, while almost six in 10 residents pay their expenses every month and have some money left over, 40 per cent say they have little left after paying all their expenses.

Steve Cronin, the founder of, which helps residents invest their own money, says the trend of residents tracking their expenses better but still struggling is because "there is much less money floating around people's bank accounts".

“People have to track their finances or risk serious problems," he says. "Despite becoming aware of their financial situation, many find it hard to get out of debt or save more money. The job market is tight while life in the UAE is still expensive. There is not enough practical advice out there on how to trim debt and expenses.”

Abu Dhabi, United Arab Emirates, October 30, 2013:      

Philip King, Head of Retail Banking in ADIB. Abu Dhabi Islamic Bank -Al Bateen in Abu Dhabi on October 30, 2013. Mona Al Marzooqi / The National

Reporter: Mahmoud Kassem 
Section: Business *** Local Caption ***  MM-131030-ADIBPhilKing001.JPG
Philip King, head of retail banking at ADIB. Mona Al Marzooqi / The National 

Mr King says the survey also showed that fewer people are optimistic about their finances than in 2014, before the sharp fall in oil prices that resulted in slower economic growth across the region.

“Now 43 per cent of people expect their personal finances to get better in the next couple of years, compared to 73 per cent of respondents in 2014, while around half expect their finances to stay the same," he says.

“That is still a very positive reading, given that in many parts of the world, a majority of people are finding that their real incomes have fallen since the global economic crisis in 2008-2009.”

To put the UAE’s personal finances further into perspective – here are the key takeaways from ADIB’s new study:


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Money management

While residents are better at tracking their finances, they have little left over once all the bills are paid.

According to the survey,  56  per cent say they “keep very close track” of their finances, while 38 per cent said they had a good idea of how much they spend and only 6 per cent paid no attention at all.

Only 3 per cent now live beyond their means each month – down from 9 per cent in 2014.

While almost six in 10 have money left at the end of every month after paying their expenses, 40 per cent say they have little left over after paying all their expenses

General living expenses swallow up most of residents’ monthly expenditure with on average 23 per cent of their monthly income spent on essential living expenses, such as food, clothes and education. Eating out, entertainment and holidays took 18 per cent of the monthly spend, while housing accounted for 17 per cent and transport for 14 per cent.

Ms Khatun Khan says: “The gap has narrowed between people’s disposable income and the expenses of living here. An average family has two sets of school fees and rent that takes more than 50 per cent of their monthly income. This is concerning as people are even unable to build an emergency fund for the unforeseen expenses let alone saving for the future.”


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Only a quarter of respondents save every month, down from 41 per cent in 2014. However, half of those polled say they save most months, compared to 24 per cent in 2014.

However the proportion of people who say they never or rarely save now sits at 5 per cent, down from 14 per cent in 2014.

Mr King says: “If you take the proportion of people who save every month (23 per cent) and the people who save most months (51 per cent), you find that approximately three quarters of people in the UAE are saving.

“In fact only 5 per cent say they never or rarely save. This compares very well internationally. For example, a survey last year conducted by Ipsos suggested that 29 per cent of people in Europe have no savings and in the United States 16 per cent of those surveyed said they have no savings.”


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Debt management

Debt is still an issue for UAE residents with 48 per cent struggling to make monthly payments on their debts compared to 31 per cent in 2014. Also worrying is that residents say 12 per cent of their monthly spend goes toward servicing debt. This is well above ADIB’s recommended target of 8 per cent.

The top reasons to take on debt are to buy a house (43 per cent), buy a car (30 per cent), start a business (38 per cent) or pay for education (29 per cent). Less popular reasons cited including buying a watch (4 per cent), buying a handbag (5 per cent) and going on holiday (9 per cent).

Of concern is that residents feel less comfortable about their level of debt, with only 28 per cent saying they feel “very comfortable’ with their debt level, compared to 51 per cent in 2014.

When it comes to credit cards, more customers are struggling to repay the total balance. Just over one in four manage to make full repayments every month, compared to 58 per cent in 2014. More people – 36 per cent - often carry a balance over, up from 26 per cent in 2014. While 16 per cent say they pay the minimum, 3 per cent do not make a payment at all

Mr Cronin says: “It is disappointing to see more people carrying balances on their credit cards, as ruinous interest rates of over 40 per cent per year can cause those balances to expand rapidly. Paying down card balances should be a priority ahead of any kind of non-emergency saving.”

The survey also found that bank consumers are not aware of the rates that they are paying on bank loans or credit cards. For example, 59 per cent know the rate on their loan and only 55 per cent know the rate charged on  their bank card.

Mr King says: "As we have seen in The National's The Debt  Panel, many people find themselves in financial distress because of unforeseen circumstances, for example job loss, or illness.

“It’s important to put something aside for emergencies, and if that means cutting back on spending when things are going well, you need to do that. And don’t wait until it’s too late to get help. Talk to your bank early, if you start to find yourself in difficulty, and while you are still in a position where they can help you.”


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Financial advice

Banks are the preferred source of financial advice for UAE residents according to the ADIB study, with 25 per cent of people saying they were “very likely” to use them, followed by family and friends at 22 per cent. A reputable online community was the third most favoured source.

Self-help books, personal finance websites and newspapers were also considered, while certified, independent financial advisers were only chosen by 7 per cent of respondents as their main source of advice.

“With only 7 per cent of people preferring to receive financial advice from a certified, independent financial adviser, it makes you wonder why they are called financial advisers,” says Mr Cronin. "Clearly, trust in the UAE advisory industry is at an all-time low. People trust advice from their banks, though there are plenty of banks in the UAE that push unsuitable long-term savings plans and whole-life insurance products."

A March poll from the CFA Institute, a global association of investment professionals, found that while 54 per cent of UAE investors use a financial adviser, only 32 per cent consider them trustworthy.

Mr Cronin adds: "I would urge any investor to be cautious about accepting advice from anyone receiving commission for promoting a product, whether they work for a bank or not."

DUBAI , UNITED ARAB EMIRATES – June 6 , 2016 : Steve Cronin , Founder of WISE at the Gate Village in Dubai International Financial Center in Dubai. ( Pawan Singh / The National ) For Business. Story by Mahmoud Kaseem. ID no : 20916 *** Local Caption ***  PS0606- STEVE04.jpg
Steve Cronin, founder of Pawan Singh / The National 

Steve Cronin, founder of offers his 10 tips to help residents stay on track of their finances in the long term.

1. Track your total "net worth" on a monthly basis, with your major assets, such as a car, investments or any properties in one column and your liabilities (loans, cards, money owed) in a second column.

2. Next, track your major income sources and expenses, to identify what you can chop out. This will help you maximise how much you can save each month.

3. Set short and long-term goals for your net worth. You can "retire" from corporate life when your annual cost of living is 4 per cent of your investment portfolio. Don't forget inflation if it will take you a while to get there.

4. Build an emergency cash fund of Dh1,000 to Dh5,000.

5. Aggressively reduce loan and card balances on anything charging you more than 5 per cent interest (or "profit") per year. Never let a credit card balance build for more than one month, it's not worth it.

6. Build a cash buffer of at least three months' expenses.

7. Identify items you are saving for within one to five years - such as a property deposit, a wedding or a child's education - and invest the money safely in term deposits or low-risk fixed income investments.

8. Invest any money you don't need for 10 to 30 years monthly or quarterly into a retirement portfolio of stocks, bonds and/or property. Try to save as much money into this as possible. Use an offshore broker such as Interactive Brokers to invest in cheap, highly-diversified exchange traded funds such as the Vanguard FTSE All-World UCITS Fund (VWRD). Don't try to time the market or invest more than 10 per cent of your portfolio in individual stocks, cryptocurrency etc.

9. Review any pensions, life insurance or savings plans you have in the UAE or at home. Check what they are invested in to ensure it is not overly concentrated in emerging markets, commodities, structured notes or funds with expensive fees. Avoid savings plans or whole life insurance plans that are expensive and inflexible.

10. Revisit each of the steps above periodically and optimise them to maximise your monthly saving percentage and investment portfolio growth.