An estimate suggests that around only 10 percent of the total youth population in Saudi Arabia believe that they have an adequate level of savings for their future. This estimate was part of a survey which had been released recently. 89 percent of Saudi Citizens are reported to be in debt, with 3.5 million of them registering SAR 400 billion in terms of personal loan in the year 2014. These figures are in accordance to the National Bonds Gulf Cooperation Council Savings Index.
One of the most significant weaknesses faced by the Economy of Saudi Arabia is an overall absence of a culture of saving, which is substituted by an alarmingly high consumption rate. In accordance with various studies, more than 30 percent of the Saudi citizens are not literate in financial matters. Across the GCC or the Gulf Cooperation Council, a total of 26 percent of the total residents have admitted that they do not have the habit of saving, nor do they do so regularly.
Osama Saleh Al Shammari, a member of the Human Resource Development Fund stated that inadequate or an absence of financial literacy is one of the main reasons behind the extravagant spending habits that the young Saudis are currently involved in. Osama Saleh Al Shammari added that many studies have shown that young Saudis easily get into debt due to travelling to foreign locations for entertainment, excessive shopping and buying and customizing luxury cars. He also stated that the Saudi citizens must make it a habit to manage their finances in a more effective manner.
Al Shammari added that many of the Saudi families are involved in spending way more money than they can afford. Many of the married couples are also seen being unable to properly manage their spending with their income even with a joint income. Social expert, Mesha Al Qurashi stated that many of the Saudi citizens are not saving but are instead spending more than they have on branded clothes, expensive food, luxury cars and houses just to keep up with their social status and show off to or compete with their friends.
Mesha added that the stores and banks have taken full advantage of this extravagant spending trend of the young Saudis and have consistently bombarded the Saudi youth with easy credit advertisements. Hence this has caused Saudis to spend extravagantly on things that they absolutely do not need. Human Development trainer, Asia Dawood has stated that many of the Saudi parents are also involved in exorbitant spending habits on products for their children, which are basically useless. Inadvertently their actions are what are making the youth to become consumers.
Asia added that a huge number of advertisements have been encouraging the Saudi youth towards a consumer culture. She urges the parents and teachers to help properly educate the youth on issues of managing their own finances, so that they can one day make proper financial decisions.
Source: Arab News
Money Saving in Saudi Arabia