Despite high average income levels in the Gulf, a significant portion of the region’s population continues to live paycheque to paycheque. According to a 2024 YouGov survey commissioned by Zurich International Life, 53% of UAE residents report struggling to meet monthly expenses. This pattern is not confined to lower-income earners. Many high-income individuals report similar difficulties, reflecting a deeper issue of financial behaviour, planning gaps, and a lack of structured savings mechanisms.
The Middle East is home to a large professional expatriate population with limited access to state-backed pensions or institutional savings schemes. Without these structural safety nets, the burden of financial planning falls squarely on the individual. Rising living costs, easy access to credit, and overconfidence in income stability have exposed many households financially.
“Despite relatively high income levels in the Middle East, particularly in countries like the UAE, residents might struggle with consistent and effective saving due to a few behavioural patterns,” said Swarnaleka Shetty, Head of Sales & Distribution, Corporate Life & Pensions, Zurich International Life Ltd. Middle East.
She points to five key issues:
- Short-term financial focus: Many residents prioritise lifestyle spending over long-term planning. The culture of instant gratification, combined with access to easy credit and high living standards, often leads to low savings rates, even among high earners.
- Overconfidence without planning: Many assume their income alone is a safeguard against future financial risks. This overconfidence leads to delays in setting financial goals, planning for retirement, or seeking expert guidance.
- Lack of money confidence: Even high earners often lack the knowledge or tools to structure their finances effectively.
- Irregular saving habits: Residents often take an ad hoc approach to saving, putting away what’s left over rather than prioritising saving at the beginning of each month.
- Limited access to employer-backed savings schemes: The Future of Work survey found last year that 31% of UAE employees say they don’t currently receive workplace or retirement savings benefits but would like to have access to them.
Financial literacy, Shetty added, is central to reversing these behaviours. “When people better understand how to manage, grow, and protect their money, confidence follows.”
Rising debt and living costs
The Central Bank of the UAE reported that personal credit card borrowing has increased since the pandemic, with credit card debt now accounting for a greater share of household liabilities. With the rise of lifestyle inflation, debt accumulation is outpacing saving across income brackets.
Housing costs, in particular, are squeezing disposable income. According to CBRE, Dubai rents climbed by 23% year-on-year in Q1 2024, placing pressure on even dual-income households. A Gulf News poll in late 2023 found that 45% of residents were cutting discretionary spending due to rising costs, yet only 21% were increasing their savings.
“Building an emergency fund and long-term savings doesn’t require a drastic lifestyle overhaul, just consistent, practical steps backed by intention and structure,” said Shetty.
She outlined several effective tactics:
- Pay yourself first: Treat savings like a non-negotiable monthly expense. Set up an automatic transfer to a separate savings account as soon as your salary hits.
- Use digital banking tools: Many banks and financial platforms in the UAE now offer ’round-up’ savings or auto-deduction features. These allow you to build savings painlessly with every transaction or paycheck.
- Set a specific savings goal: Whether building an emergency fund worth 3–6 months of expenses or saving for a life event, naming the goal makes it more tangible and easier to stick with.
- Opt into employer-backed savings plans: Where available, these schemes foster discipline and reinforce long-term thinking.
- Speak to a financial advisor: The data shows a clear link between advice and confidence. While 68% of UAE residents feel confident about their money today, this rises among those who have sought professional financial advice.
- Start small, but start now: Even Dh500 a month, when automated, can add up significantly over time.
Are fintech tools making a difference?
According to Zurich’s recent survey with YouGov, 68% of UAE employees now plan to save some or most of their bonus—a reversal from pre-2020 trends. This shift, Shetty said, is especially visible among younger professionals.
“This change is being driven by rising living costs and growing awareness of future financial needs, such as retirement and children’s education. While access to structured workplace savings plans remains limited (only 17% currently have access, according to our survey), there is growing recognition of their value.”
Fintech platforms like Sarwa, baraka, and StashAway increasingly offer salary-linked and goal-based investment tools. Users can set standing instructions for recurring monthly deposits, which build savings passively over time. Traditional banks like Emirates NBD and ADCB are also expanding automated savings features.
While these solutions are beginning to shift behaviour, Shetty noted that “broader adoption and employer support are still needed to maximise their impact.”
As the UAE and wider Gulf explore reforms to end-of-service gratuity schemes and launch voluntary retirement savings platforms, the foundations for long-term financial planning are being laid. Still, success will require alignment across three fronts: individual discipline, employer participation, and regulatory support.
The path to financial resilience in the Middle East does not depend solely on income. “By building a structure around savings and improving financial literacy,” said Shetty, “salaried individuals can shift from reactive money management to proactive financial well-being.”
Until then, the region’s high salaries will continue to mask deeper vulnerabilities—and the paycheque-to-paycheque cycle will remain hard to break.
