A statistical report issued by the Family Affairs Council revealed that 55% of Saudis do not save money, while the National Strategy 2030 aims to raise the savings rate from 6 to 10%. More than 12 government agencies are looking forward to achieving the aspirations of Vision 2030 in raising the savings rate, and according to a report prepared by the Council, the results of a study conducted on the reasons that drive Saudis to save, 58% save for emergencies, 34% for marriage, 26% for housing insurance, 17% for investment and development. Financial assets and 0.6% for travel.
A poll conducted by the World Bank indicates that the rate of financial literacy among adults is estimated at only 31%. others such as Norway (71%).
The Kingdom works to promote a culture of saving among the various segments of society, and to develop the concept and financial planning for individuals. So that the person can follow simple methods that lead to maximizing the benefit from the daily financial exchange, through awareness of the returns arising from expenses and expenditures, in order to achieve returns related to the well-being and happiness of the person.
Forget the luxuries and travel
Economists emphasize that saving is the path to financial independence and achieving the family's future aspirations. Because it achieves a positive impact on the economy and society in cooperation and participation with the various institutions of society. They pointed out that savings is a strong insurance system that enables people to provide a decent, more prosperous and quality life. Pointing out that the importance of saving lies in investing in the areas that the individual desires. To contribute to the wheel of production and development in society.
The experts added that saving gives the ability to make independent decisions, and obtain a financial support after retirement, in addition to having a financial portfolio when crises occur, in addition to developing the family’s financial assets through investments. The role of families and individuals in saving is centered on working to develop a savings plan based on reducing unnecessary expenses and dispensing with many luxuries and expensive travel trips, identifying needs and fulfilling them according to their importance, and being keen in the first place to spread this culture among their children.
They buy what they don't want
A working paper at the Third Saudi Investment and Securities Conference on the culture of saving and raising the percentage of household savings out of total income from 6% to 10%, and how the future of savings will be in the Kingdom, revealed that balance in consumer behavior paves the way for savings and protects citizens’ wealth from waste. “Individuals buy what They do not want or buy more than they need (extravagance), and without deterrent laws for throwing food, this behavior will not improve.
The paper revealed that as long as some individuals spend huge amounts of money on travel and tourism (72 million riyals) without saving in order to own the necessary assets such as saving for housing, the problem will remain rooted without interruption and banks will benefit from this imbalance in unjustified consumer spending and thus will remain This category is in a spiral that has no decision, knowing that consumer loans with credit cards at banks (except for real estate and leasing financing, loan against shares, real estate renovation and improvement loans, education and health care loans) amounted to 322 billion Saudi riyals, according to the monthly statistical bulletin of the Monetary Agency in January 2017 (Data for the fourth quarter of 2016), with an increase of 8% compared to the fourth quarter of 2015, as the balance of consumer behavior comes from the participation of all relevant authorities and ministries and is not limited to the Social Development Bank (or the Savings and Credit Bank previously), for example, the Ministry of Education must have a vital role In this matter, it is represented by a clear vision in an educational curriculum related to financial aspects, including savings skills and dealing with money for all educational levels. The Ministry may participate in encouraging savings programs for students undertaken by the Monetary Agency or the Capital Market Authority so that parents can pay the annual fees for schools or private education universities.
Car loans decline
Loans for cars and personal transportation declined to 12.3 billion riyals during the second quarter of 2022 compared to 15.5 billion riyals during the same period in 2021, and loans for furniture and durable goods declined to 8.68 billion riyals during the second quarter of 2022 compared to 12.6 billion riyals during the same period. From the year 2021, loans granted for health care purposes decreased to 583 million riyals during the second quarter of 2022 compared to 676 million riyals during the same period in 2021, and consumer loans granted for education purposes increased to 5.9 billion riyals during the second quarter of 2022 compared to 4.4 billion riyals During the same period of the year 2021.
Total credit card loans increased to 20.54 billion riyals in the second quarter of 2022, compared to 18.19 billion riyals in the second quarter of 2021.
Training kids to save
Financial advisor and banking expert Imad Al-Khazim told Okaz that encouraging a culture of saving requires unremitting efforts from families and government institutions, and families should join efforts to set an example for their members in spending without extravagance or frugality, and accustom them from childhood to saving and rationalizing spending, and this is the task of the home and school from By including in education curricula the importance and benefits of saving and its mechanisms, through simplified presentations and attractive stories of successes based on training savings in addition to joint stock companies, to encourage savings through the establishment of savings funds in which corporate employees contribute, and are supported by the company by distributing rewarding returns in the form of rewards and incentives, as is The case is in Aramco and some of the leading companies along with government institutions responsible for the financial sector.
Al-Khuzaim called on the Ministry of Finance and the Saudi Arabian Monetary Agency to develop fiscal and monetary policies, to ensure that they achieve balance in the macroeconomy to bridge the gap that may appear between the savings rate and the investment rate.
Campaign to raise the culture of saving to 10%
The financial sector development program document revealed that the financial planning and savings program is one of the three main objectives of the program, and the savings rate of Saudi families is among the lowest in the world. In addition to the pivotal and other initiatives, with the total participation of 12 government agencies, to achieve the aspirations of Vision 2030 in raising the savings rate. On the one hand, the financial sector development program aims to raise the percentage of household savings on a regular basis to 29%. On the other hand, the strategy to enhance and enable financial planning aims to stimulate and support sustainable demand for savings plans, push for the expansion of savings products and channels available in the market, and improve The savings system and its promotion, and the promotion of financial culture, with the participation of the Banking Information and Awareness Committee in Saudi banks, which seeks to advise deducting a percentage of the income for savings in order to meet emergency financial obligations and plan for the stage of financial stability, and the campaign (Your savings are safe) launched by the Saudi Center for Social Responsibility; It is the first Saudi campaign to raise the savings culture from 6% to 10% for Saudi families.
Most people save
According to the "WiseBread" website, which is concerned with credit, financial management, and people's spending statistics, and gives financial tips for saving, there is a list of the most self-sufficient people in order to save in 2022:
The Chinese: There are many reasons and justifications, and despite the Chinese government's attempt to build an economy that is boosted by domestic consumption, the Chinese save 30% of their income, thus earning the title of the most miserly people. The French: The Organization for Co-operation and Development says that the country's unstable economy has prompted French households to save more than 15% of their income. The Swiss: The Swiss have a saving rate of 13% of their income, and they are also the least home-owning people among all the peoples of the developed world.
Swedes: Swedes’ saving rate exceeds 11% of their income, making them one of the highest savings people in Europe. "We will have to repeat this statistic in a few months, when inflation and rising prices will eliminate any opportunity for those living in Sweden to save." Indians: According to reports, Indians are among the peoples who love to pass wealth from parents to children, and that is why they spend it sparingly to the point of buying the lowest-priced copies of things, even if the higher-priced copies will give them a better consumption experience.
Germans: a people who save so much that their government repeatedly urges them to spend more money in order to boost internal demand for German products, thus boosting the economy. The German household saving rate reaches 10% of their income.
The Belgians: The savings rate of the Belgians is close to 10%, and they are among the people who were most afraid of increasing government taxes.
The Irish: After successive financial crises, the Irish learned to increase their austerity to the extent that reports say that their savings amounted to 9% of their wages several years ago. Chileans: The standard of wages and living in all of Latin America does not usually allow for savings. Despite this, families in Chile manage to save 7% of their income, becoming the highest in that part of the world.
Personal consumer loans in Saudi Arabia
Consumer loans granted by Saudi banks to individuals increased by 13%, by 51.57 billion riyals, to 445.755 billion riyals in the second quarter of 2022, compared to 394.18 billion riyals in the second quarter of 2021, an increase of 13% and by 51.57 billion riyals, according to the “Arabian” analysis. Business », according to the data of the monthly bulletin issued by the Saudi Central Bank (SAMA).
And with the resumption of tourism and travel after the period of restrictions that it witnessed as a result of the outbreak of the (Covid-19) epidemic, consumer loans granted to tourism and travel recorded a significant increase by 37.3%, by 204 million riyals to 750 million riyals during the second quarter of 2022 compared to 546 million riyals during the period Same year 2021.
Consumer loans granted for the purposes of restoring and improving real estate decreased to 15.22 billion riyals during the second quarter of 2022, compared to 22.19 billion riyals during the same period in 2021.
Psychological consultant: Divorce.. and financial mismanagement
Psychological consultant Omar Al-Asmar confirms that the culture of saving starts from the home, specifically the father. The child is affected by the behavior of the father and mother, as he learns how to save his money through a “piggy bank” in which he collects what he receives and disposes of it to manage his affairs properly. Experts do not fully know the reason for the tendency to spend or save, and it is possible that this part is related to education, and there is a topic that researchers in psychology are currently studying about children. Preliminary data says that people tend to inherit spending habits from their mothers more than from other family members.
"People's spending behavior is related to how others look, your culture, the neighborhood you live in, and your friends," explains psychologist and founder of the Institute for Financial Psychology Brad Klontz. "No matter where you are on this financial spectrum, it can change," says Cynthia Crider, associate professor of marketing at Washington University at Olin School of Business in St. Louis.
Al-Asmar added that the culture of saving in society is weak, and at the level of families, there are many problems due to the poor culture of saving and poor management of money and the family budget, and the latest study at the Gulf level shows that the second largest cause of divorce is financial mismanagement.
If you feel upset.. you are saving!
Social worker Abdullah Al-Baqawi sees through “Okaz” that the behavior prevalent in society, and among the youth in particular, is consumer behavior and a reflection of thought. A great effort to raise awareness about saving, investment and good financial management, which helps balance life and stabilize families, as well as a sense of reassurance in terms of the future, indicating that in the recent period there have been attempts to spread the culture of saving through shy school initiatives, but they do not fully achieve the desired goal, and they came Late, and needs further development and spread.
In response to Okaz’s question about the characteristics of savers, Al-Baqawi asserts: If you feel uncomfortable when you think about spending, and you take a lot of time planning or postponing purchases, then this indicates that you are a saving person and tend more to self-control and act more rationally. Spending money becomes painful because they feel they are making themselves vulnerable and some people who find it difficult to spend do not allow themselves the opportunity to enjoy their resources. People can be so anxious about the future that they do not allow themselves to enjoy any pleasure in the present.
Absence of a savings culture due to banks
Citizens blamed the absence of a savings culture on banks, which see their success in doubling their money and stimulating consumption.
Tariq Al-Zaqdi says: The culture of saving is a societal culture, not an individual culture. Muhammad al-Mismar agrees with him in the same opinion.
Obaid Al-Shammari points out that the absence of financial planning exposes Saudi families to financial crises in the long run, not because of low income, nor because of daily needs, but because of weak individual and family planning for savings.
Abdullah Al-Ajimi says that among the obstacles to saving is the dependence of many families on loans, and the failure to raise children on a culture of saving. He added that the competent authorities are making clear efforts to follow up and support price controls, reduce the prices of consumer goods and address exaggerations, but the imbalance and its treatment begin with the family and education curricula.
Saad Al-Otaibi concludes that the culture of savings is almost unavailable, in light of the high rate of loans and other banking products, especially for young employees, pointing out that the standard of living in this context is not necessarily commensurate with the level of income, and therefore the financial burden increases and the savings rate decreases.
Motabalawwd (Hail) @Motabalawwd
