Saving must be important, because it's so hard to do

On the Money Any wealth planner or financial adviser worth their salt will tell you that planning for the future is vital.

Gary Clement for The National

It's official. We are saving less. But is it surprising considering the global economic climate of the past three or so years?

According to the 2011 National Bonds Savings Index, released this week, the level of our savings has dropped over the past year. Of more concern, however, is that 86 per cent of people in the Emirates feel that they've not saved enough for their futures, 46 per cent say they saved much less than they planned and a whopping 71 per cent of us don't save regularly.

Any wealth planner or financial adviser worth their salt will tell you that planning for the future is vital. After all, not all of us are lucky enough to have kind, charitable children who will volunteer to shelter and feed us if we can't support ourselves financially in our old age.

And the thought of that happening is pretty depressing. Not just for me, but also for my daughter, who, at just eight, will be depending on me for quite some time.

Considering the trillions that have been wiped off global pension funds since the financial crisis hit in the latter half of 2008, not to mention the fact that some governments around the world can't afford to provide state pensions for their citizens (one of the main reasons the age of retirement has been upped, or is in the process of being increased, in a range of countries, including Australia, France and the UK), there's never been a worse time to not save.

But, in some ways, the reasons are understandable.

Some respondents to the survey, which was conducted in conjunction with YouGov, blamed the increased cost of living in the UAE on their inability to sock away a little money every month.

Others said they couldn't save because they had too many liabilities and loans to pay off every month, which left the cupboard bare and them living a shaky hand-to-mouth existence.

But the biggest complaint that emerged from the survey was that residents of the UAE were paying more for the necessities of everyday living, including groceries, transportation, household items and utilities.

"Different emirates show different patterns, though," says National Bonds, the Dubai-based Sharia-compliant savings scheme. "Sharjah and Abu Dhabi provide the biggest contrast. While Sharjah residents claim that they are spending more money on necessities such as groceries, household items and children's education, Abu Dhabi residents' increasing expenditures are down to transportation, rents, eating out and buying luxury items."

I've done the cost of children's education to death recently, so you all know my thoughts on that. I'm surprised, however, it wasn't an issue for residents of Abu Dhabi considering the squeeze on school places here and the resulting high fees. Transportation I can understand. The cost of petrol has risen twice over the past year.

But what about the incentives to save? At the height of the financial crisis, UAE banks, low on liquidity and desperate for our cash, were offering high interest rates on our savings. At one stage, my bank quoted me about 6 per cent for a six-month fixed-deposit account.

Today, that same bank is offering just 1.05 per cent for the same account. Regular savings accounts offer even less, with some banks paying out as little as 0.10 per cent. I guess that's what happens when they don't need our money as much.

There is one other issue contributing to our inability to save: the financial awareness of many in the UAE is sadly lacking. In fact, there are many people here who don't even have a bank account, who rely on cash and the help of a money exchange outlet to move their money about.

Last October, Personal Finance launched a Financial Literacy campaign, kicking it off with a special issue dedicated to improving financial awareness in the UAE.

A few banks have followed in our footsteps, notably Abu Dhabi Islamic Bank, which started its financial awareness campaign in April.

National Bonds has also promised to do its part in raising financial awareness in the UAE, saying it it is planning a roadshow to help the "community manage their spending and plan their savings".

"We have seen that while there is a willingness to save, there is a lack of understanding how to save," says Mohammed Qasim Al Ali, the chief executive of National Bonds.

"As a result of this ... we will be launching a financial education roadshow later this year, which will aim to educate different segments of the community such as housewives on the tools they need to use to develop healthy savings habits."

And, as any wealth adviser or financial planner worth their salt will tell you, it's never too late to start.