Khaleej Times, Sunday, Feb 19, 2023 | Rajab 28, 1444
Revealed: How much is UAE residents’ disposable income and where do they spend it?
Emirates:
With the UAE not levying income tax, residents of the country enjoy a higher
disposable income, personal finance advisors have said. Disposable income is
usually categorised as money that has been left over after paying fees, expenses
and spending on necessities like housing, food, fuel, and school fees.
A new survey released by YouGov showed more UAE residents reported a decrease as
opposed to an increase in their disposable income in the past 12 months.
However, there is a less pessimistic view on future disposable income, and fewer
people expect a fall in disposable income in the next 12 months.
“Due to the favourable zero income tax rate in the UAE, disposable income is
generally higher here, but some people either send a lot of this money back to
their home country or live beyond their means i.e., spending more money than
they can afford to spend. This could be pointless or excessive spending like
buying upgrades on flights, designer clothes, expensive dinner,s etc. So, it is
all relative,” said Rupert Connor, partner at Abacus Financial Consultants.
Where do residents spend?
The UAE's residents spend their disposable income mainly on lifestyle purchases
such as luxury apparel, gadgets, entertainment and expensive dinners, as well as
investing in property and cryptocurrencies.
UAE residents’ disposable income in the past 12 months:
42 per cent say decreased
30 per cent claim it remained the same
20 per cent say disposable income increased
In the next 12 months:
35 per cent see a decrease
29 per cent expect to remain the same
24 per cent foresee an increase
Top financial activities of UAE residents in the next 12 months:
Regularly put money into savings
Pay for health insurance
Invest in stocks
Pay for home, pet, and car insurance
Pay money for pension/retirement plan
Buy items using buy now, pay later plans
Take loans or credit cards to make a purchase
Invest in cryptocurrencies
Pay for life/critical illness insurance
UAE finance to buy a car
Source: YouGov, KT Research
Purvi Munot, Co-founder and CEO of Sav, said the estimated disposable income of
UAE residents’ post rentals, which accounts for a large chunk of expenses, is
around $2,000 (approximately Dh7,500).
“Lifestyle purchases – luxury apparel, gadgets and entertainment – top the list.
Households with kids focus on spending across quality education, occasional
travel and frequent dine-outs,” she said.
Munot added that saving continues to be high on the top of the agenda with the
changing macroeconomics such as rising interest rates. “Most popular avenues in
the geography for spending disposable income include investments into real
estate and cryptos, buying automobiles, lifestyle purchases and education.”
As a global recession looms, UAE residents have been advised to tighten their
belts.
“With the cost of living rising, rents and property prices riding high, and
inflation continuing to march on, it might be wise for UAE residents to start
tightening their belts by cutting expenses, and living more frugally,” said
Rupert Connor.
In the past 12 months, the YouGov survey found that putting money in their
savings (28 per cent), paying for health insurance (27 per cent), paying for a
home, pet or automotive insurance (23 per cent) and using short-term borrowings
to make a purchase (22 per cent) were the top few financial activities.