Saudi families fail to save up

Experts say that 85 percent of Saudi families do not save money and resort to diving into their savings or borrowing to meet their needs.
Economic expert Fadl Albo Ainain said most Saudi families do not bother to save money, notably those who depend on a monthly income.
One of the biggest weaknesses of the Saudi economy is the absence of savings. The spirit of consumption is dominant and this negatively affects economic growth and increases the rate of inflation due to the increased rate of consumption, say experts.
Due to the absence of a culture of saving, Saudi families are exposed to financial woes every month, not because they earn a low income but because they never learned to save money and engage in financial planning, he said.
He said that the economies of developed countries are measured by the rate of individual savings, which gives a good indication of their well-being and financial planning.
The increased rate of savings reflects durability and strength of the economy.
Economist Yusuf Al-Zamil criticized the absence of the saving culture in Saudi society. He said most Saudi families suffer from over-spending and sometimes spend 10 percent more than they earn. This urges them to borrow money.
Shoura Council member and economic expert Fahad Juma’a grouped the Saudi society into three categories: the low-income category where salaries start from SR3,000, medium-income (starting at SR 5,000-SR6,000) and high-income people (SR 15,000 and above).
Many are unable to save up since they pay installments on consumer loans in order to own a house. This has led to the spread of a culture to live by the day, he said.
Al-Zamil said employees should change their consumption pattern and work out a monthly budget to rationalize spending and avert resorting to loans.
He was skeptical about a recently released World Bank report, which put the per capita income in the Kingdom at SR6,800 per month. The Central Department of Statistics and Information (CDSI) issued no exact data.
Consumer and credit card loans registered the highest level in the Kingdom at SR300 billion at the end of 2012, of which SR37 billion and SR8 billion were allocated for real estate and consumer loans respectively, a local newspaper reported.