Joy moved to Dubai more than seven years ago in the hope of building his own house and improving his family’s financial situation. To this day, his dreams look too far-fetched.
For the lone breadwinner who is already struggling to support his wife and three children with less than Dh5,000 ($1360) monthly income, saving for a property has to take a back seat.
He says he will need to work for another five or ten years before he will be able to save enough money and start planning for his own house.
“[I’m struggling to meet my goals because] there is no annual increase and promotion in my current company. Since I’m working in the government sector, I can’t change my job within six years, otherwise there will be an immigration ban,” Joy, who works as a technical assistant at a company in Dubai, tells Gulf News.
Joy is not alone. A research by Zurich International Life has found that while it was the tax-free income that motivated them to come to the UAE, many expatriates later realised that it’s difficult to achieve their life ambitions.
Nearly half (44 per cent) are not confident that they will fulfill their financial goals when they leave the country. In fact, 26 per cent of the expatriates do not set any financial goals at all for the duration of their stay in the country.
“Many expats come to the UAE with the intention to use their tax-free salary to increase their savings and secure their financial future but many fail to realize their financial goals,” Paul Dawson, head of retail distribution at Zurich International Life, told Gulf News.
Dawson said there are a number of reasons why a significant number of foreigners in the UAE are frustrated with their goals and chief among them is that the high cost of living is limiting their ability to save for their future.
Apparently, many expatriates move to the UAE without the full picture of the cost of living conditions in the UAE and how their expenditures could impact their incomes.
HSBC's Expat Explorer survey in 2014 showed that the UAE is one of the costlier destinations for expatriates, with more than half (60 per cent) saying that they would choose to leave because it is too expensive.
Respondents in the HSBC study, about 58 per cent, said that the biggest risk to their financial wellbeing and confidence is the rent increases.
“Many expatriates underestimate the cost of living in the UAE and find their disposable income is lower than expected, which impacts their ability to save. Expats often find outgoings in the UAE, such as rent, utility bills and school fees, are more expensive than they originally assumed,” he said.
“Living in the UAE also introduces a new lifestyle and culture of consumerism that many expats find difficult to ignore. Their intention to save can be overtaken by a compulsion to spend. Sadly, many expats even take on debt rather than achieve their financial and savings goals.”
Financial advisers have said time and again that it is essential for expats to set their financial goals and save money as early as possible.
The longer people wait to prepare financially and save for their future, the more they will have to work hard to reach their desired goals.
Besides, people also need to prepare for the unexpected and this means they need to set aside enough money that could help them cope with an emergency or get on with life if they become jobless.
“No one has a crystal ball but by not having a sound financial plan leaves you at a greater disadvantage,” a financial planner from Acuma had advised earlier.
By Cleofe Maceda