UAE workers found to rarely save their bonuses

More than half of UAE residents spend their annual bonus on settling debt and paying day-to-day bills, according to Zurich Insurance Group.

A survey of more than 1,000 respondents found 71 per cent expecting a bonus this year but 55 per cent of them claiming the money would be allocated to repaying loans or daily living expenses such as rent or school fees.

The diverse population reflected a variety of spending patterns. The survey showed that 45 per cent of Arab expatriates were most likely to use their bonus to settle debt, and less than a third – 32 per cent – of western expatriates were likely to do the same. Emiratis were the most likely to spend their bonus, with 15 per cent planning on a purchase, while Indian expatriates were likely – 16 per cent of respondents – to invest it in a savings plan.

“The majority of people do not budget correctly,” said Paul Dawson, the head of retail distribution at Zurich International Life. “That is clear when you see most settling debts and paying day-to-day bills with their bonus. While I agree with anyone who settles their credit cards because of the exorbitant interest rates, savings should be planned. One should save first and spend what is left, rather than spend first and save what is left. The UAE offers tax-free salaries, but that just seems to increase discretionary spending, not saving.”

Forty-four per cent of the respondents relocated to the UAE to become more financially secure, but the increased disposable income was likely to result in unfettered spending and large debts.

Zurich’s survey found only 44 per cent of expatriates believe they will fulfil their financial goals when they leave the country, with 26 per cent setting no financial goals for the duration of their stay.

“I find that I have to work extremely hard here, and therefore I enjoy my salary and anything extra when it arrives,” said Rob Kempton, a British real estate agent for Allsop & Allsop. “I find some weekends to be very expensive, eye-wateringly so, sometimes. I have a nice life here with two cars and a nice apartment. I do save though, but I could probably save a lot more than I do. But that’s how it is out here.”

Zurich’s survey also found the majority of company bonuses – 81 per cent – equated to one month’s salary or less, while 7 per cent received a bonus worth three times their monthly salary or more. For 45 per cent of respondents, the bonus this year was higher than the payment last year, and 30 per cent received a lower bonus this year than previously.

“Regardless of what my bonus is, I save 80 per cent of it in National Bonds,” said Christy Abraham, an Indian account manager with BPG Cohn & Wolfe. “I’m very disciplined and do not understand how people can spend Dh600 on a brunch – how much food can one person eat? Since I got married we now live on one salary and save the rest. It really isn’t hard. I came here to secure myself financially and live a comfortable life in the future, which is what I intend to do.”

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