Gulf-based residents are under renewed pressure to reassess their financial buffers, as shifting labour dynamics and high living costs challenge traditional approaches to emergency savings.
“In non-income-tax jurisdictions such as the UAE, residents may benefit from higher net salaries. However, they remain exposed to the region’s elevated cost of living,” said Faizan Mandavia, Founder and Chief Advisor at FAM Advisory. “Major financial obligations, including rent, private healthcare, education fees, and large annual lump-sum payments such as housing cheques and school tuition, are often heavily concentrated at the start of the year, placing significant pressure on household finances.”
Mandavia recommended a buffer of at least six to nine months of core living expenses. “For single professionals with stable employment, six months may be adequate. But for families or those in industries vulnerable to economic cycles, a nine-month buffer is more appropriate.” He noted that expatriates must be fully self-reliant in case of income disruption. “An emergency fund should also account for one-time mobility expenses, such as airfare, relocation costs, and temporary accommodation in the event of repatriation, expenses that can easily range between Dh20,000 and Dh30,000 per person, depending on the destination and timing.”
The traditional benchmark of three to six months’ worth of savings is increasingly viewed as inadequate. “Traditional emergency fund guidance falls short in the context of transient, expatriate-dominated markets,” Mandavia said. “The employment-residency linkage in these economies means that job loss often triggers immediate legal, housing, and logistics implications.”
Sectoral analysis
For sectors prone to restructuring, such as construction and hospitality, Mandavia suggested raising the target buffer. “A more conservative target of nine to twelve months of expenses is prudent. This accounts for not just the cost of daily living but the real potential of unplanned repatriation, dependent relocation, and job market re-entry either locally or abroad.”
The risks of relying solely on end-of-service benefits or credit lines remain significant. “The assumption that credit or end-of-service benefits can replace a traditional emergency fund exposes residents to multiple layers of financial risk,” Mandavia said. “Delays in payout, especially during company restructurings or disputes, are common. In some cases, employees have experienced delays of several months in the disbursement of their end-of-service benefits.”
Interest on credit cards and personal loans in the Gulf can exceed 35% annually. “Relying on credit as a fallback carries its own dangers,” he warned. “Missed payments may lead to credit blacklisting, travel bans, or legal proceedings. Simply put, neither EOSB nor credit offers the immediacy, reliability, or autonomy of a well-structured emergency fund. Liquidity is what enables decision-making. Without it, individuals risk losing not just financial stability but also their ability to navigate crises on their own terms.”
Mobility buffer
Mandavia also flagged the importance of mobility-specific planning. “Mobility is not just a theoretical risk, it’s a lived reality,” he said. “The region’s visa structures are tied to employment, meaning the loss of a job can necessitate departure within 30 to 60 days.”
He recommends a dedicated “mobility buffer” equivalent to at least one to two months of salary. “The goal is not just survival, but the ability to move quickly, without compromising dignity or long-term career planning.”
Digital savings platforms are starting to gain traction, particularly among younger residents. “Digital savings and cash management platforms are gaining momentum among younger earners in the GCC,” Mandavia said. “According to a 2024 regional fintech survey, 40% of residents aged 25–35 use some form of digital tool for saving or budgeting, up from just 22% in 2020.”
Digital savings platforms are starting to gain traction, particularly among younger residents. “Digital savings and cash management platforms are gaining momentum among younger earners in the GCC,” Mandavia said. “According to a 2024 regional fintech survey, 40% of residents aged 25–35 use some form of digital tool for saving or budgeting, up from just 22% in 2020.”
Platforms like Tabby Save, Sarwa, and StashAway are becoming more widely used, offering features aligned with Gulf salary cycles and lifestyle patterns. But many still favour traditional banks. “Over 60% of residents still rely on conventional savings accounts offered by local or international banks,” he said. “Nevertheless, the direction of progress is evident.”
With new digital banking licences and regulatory sandboxes taking shape, Mandavia expects these tools to become more mainstream. “Digital-first saving habits are poised to become the norm, particularly among the emerging middle class and younger professionals.”
