The UAE stays ahead in developing saving habits in the region as it recorded the highest percentage of regular savers - 37 per cent - compared to 25 per cent in Saudi Arabia and 27 per cent in the rest of the surveyed GCC countries combined, the latest data shows.
National Bonds Corporation, which launched the results of its 2016 Savings Index for select GCC countries based on a survey conducted across Saudi Arabia, Bahrain, Kuwait and Oman, said 50 per cent of respondents in Saudi Arabia and 55 per cent in Bahrain, Kuwait and Oman are the sole earners in their families, while 44 per cent across the board partially contribute to their household income.
Conducted by Amman-based Sondos Market Research, the survey aimed to gain feedback from respondents on three key areas - financial stability, saving potential and existence of an enabling saving environment in their respective countries.
The index further disclosed that 25 per cent of respondents in Saudi Arabia saved regularly in 2016, with 88 per cent managing to put money aside every month. As for the rest of the surveyed GCC countries, 27 per cent of respondents saved regularly, with 90 per cent saving monthly. Among the rest, 64 per cent in Saudi Arabia and 58 per cent in the other GCC countries saved whenever possible.
The results indicated that 74 per cent of survey participants in Saudi Arabia and 63 per cent in Bahrain, Kuwait and Oman believe they lack sufficient savings for the future. About 45 per cent of respondents in Saudi Arabia and 55 per cent in the rest of the participating GCC countries aim to increase their savings by five to 15 per cent. Furthermore, 44 per cent in Saudi Arabia and 29 per cent in the other GCC countries plan to save 16 to 30 per cent more this year.
Mohammed Qasim Al Ali, CEO of National Bonds Corporation, said the National Bonds Savings Index is a significant indicator of the economic pulse of each country.
"The decline in Saudi Arabia's score reflects the changes the nation has witnessed. However, the index also records a positive sentiment among the majority of respondents. Saving potential as well as financial stability and intention to increase savings in the near future have also registered an uptick."
No pay rise or bonus
The National Bonds index also showed that 47 per cent of survey participants in Saudi Arabia and 59 per cent in Bahrain, Kuwait and Oman received neither a pay rise nor a bonus in 2016. Of the 49 per cent who did receive a pay rise or a bonus in Saudi Arabia, 15 per cent claimed to have saved the whole amount.
When questioned about the percentage of annual household income put aside, 18 per cent of respondents in Saudi Arabia admitted to not saving any at all, while 14 per cent saved less than 10 per cent, and 35 per cent saved between 10 and 20 per cent. As for the rest of the GCC countries surveyed, 32 per cent did not save anything, while 18 per cent saved 10 per cent of their annual household income.
In Saudi Arabia, 18 per cent of savers managed to put aside much less than planned, while 26 per cent saved a little less than planned, 30 per cent saved as much as planned, and 20 per cent saved slightly more than planned. Only seven per cent of the respondents confirmed that they saved much more than planned. Among the other GCC countries that participated in the survey, 28 per cent of respondents in Bahrain put aside much less than planned, compared to 22 per cent in Kuwait and 21 per cent in Oman.
The index further indicated that 30 per cent of respondents in Saudi Arabia and 22 per cent in the rest of the GCC countries did not encounter any contingencies that changed their saving plans in 2016.
"In addition to helping us understand the savings environment of the target countries, the National Bonds Savings Index provides us with a measure of financial acumen and awareness of the importance of saving among their population," Ali said.
"In recent years, we have witnessed great progress in this regard, although we continue to observe financial behaviours that hinder commitment to regular saving, such as taking out unnecessary loans and credit cards.
"In the future, we hope to see schools include financial planning in their curricula and educate youngsters on responsible financial behaviour to equip the new generation with the ability to manage their finances effectively while contributing to the development of the nation," he added.
High living expenses
Elaborating on the factors that prevented non-savers from setting aside part of their income, 29 per cent of survey participants in Saudi Arabia indicated high living expenses, 21 per cent blamed loan payments, and 29 per cent admitted it was due to a lack of knowledge of financial planning. As for respondents from the rest of the participating GCC countries, the majority - 59 per cent - said high living expenses made it impossible for them to save in 2016, and 18 per cent cited loan payment obligations as the reason.
About 60 per cent of respondents in Bahrain, Kuwait and Oman expect to be financially stable in the near future, and 43 per cent anticipate an increase in income. Similarly, 56 per cent of those surveyed in Saudi Arabia foresee a financially stable future, and 39 per cent expect a higher income.
According to the index, 61 per cent of savers in Saudi Arabia and 52 per cent in the other GCC countries plan to increase their savings in 2017. Among non-savers, 48 per cent in Saudi Arabia and 39 per cent in other GCC countries intend to start saving.
Inflation, high living costs and unexpected expenses featured high among the factors likely to affect the respondents' saving plans during 2017. In Bahrain, 35 per cent of survey participants quoted unexpected expenses, while 54 per cent mentioned inflation and high living costs.
In Kuwait, 63 per cent believed high living costs may interfere with their plans, and 20 per cent were wary of emergency payments. As for Oman, 18 per cent cited unexpected expenses as a factor, while 51 per cent blamed inflation. In Saudi Arabia, 42 per cent of respondents felt they may be affected by high living costs, while 35 per cent mentioned emergency payments as a hindrance to their saving plans.
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