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Abu Dhabi, UAEFriday 14 December 2018

UAE Banks Federation issues financial literacy handbook to reduce chronic indebtedness

The organisation wants to cut down financial distress among residents

Abdul Aziz Al Ghurair, the chairman of the UAE Banking Federation, hopes the new guide will help residents make wise decisions on their financial transactions.  Satish Kumar / The National
Abdul Aziz Al Ghurair, the chairman of the UAE Banking Federation, hopes the new guide will help residents make wise decisions on their financial transactions.  Satish Kumar / The National

The UAE Banks Federation (UBF) launched a new financial literacy handbook on Tuesday to help consumers manager their money more effectively and combat the rise of indebtedness.

The organisation says its Financial Literacy for Individuals publication was released after banking and financial experts noted that “consumer debt has been piling up, resulting primarily from a lack of financial knowledge".

“We aim to employ this handbook to further develop the skills of consumers by providing information and guidelines, which enable them to make wise decisions on their financial transactions which in turn help them reach financial independence and reduce the possibilities of financial trouble,” said Abdul Aziz Al Ghurair, chairman of UBF.

The release comes as many residents are feeling the squeeze due to rises in the cost of living in the first quarter of this year. Statistics released on Sunday by the Statistics Centre - Abu Dhabi show that consumer prices rose by 2.7 per cent in the first quarter of 2018 compared to the same period the previous year.

Central Bank of the UAE data, released last month, found that of the 7.168 million cheques worth Dh351.1 billion, handled by the UAE Clearing Cheque System during the first three months of 2018, Dh15.7bn worth bounced.

"The UAE Banks Federation is no doubt aware of the number of complaints and crises from people who have made poor investment choices, been caught in a scam or taken on too much debt. The release of such a guide is a hugely positive sign of maturity by the banking sector and I would encourage further investment in engaging educational content," said Steve Cronin, the founder of DeadSimpleSaving.com, which helps investors manage their finances.

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Read more:

Improving financial literacy in the UAE still needs attention

How to file a case against your bank over escalating credit card debt

The Debt Panel: Single mother of four is being hounded by debt collectors over Dh43,000

The expensive bills you can now pay monthly in the UAE

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With some households finding it hard to make ends meet, the risk is that they turn to loans and credit cards to fund their lifestyle, which they later struggle to repay. This is a problem The National has been tackling for two years through its The Debt Panel column, which helps readers struggling with high levels of indebtedness.

“The amount of debt people find themselves in, sometimes very quickly, is simply because they make financial decisions on immediate need. They are reactive to a current situation without having full understanding of their commitment,” said Rasheda Khatun Khan, a wealth and wellness planner and founder of Design Your life.

The UBF's new handbook outlines the basics required to make effective financial decisions covering four areas: planning; borrowing; saving; and investing.

The organisation said it hopes that a comprehensive understanding of financial products and concepts will reduce the amount of financial distress experienced by some residents and lead to greater levels of financial inclusion in the UAE.

However, Mr Cronin said that while the new guide is packed full of useful information, this made it "wordy and dense like a company's policy manual".

"Without a more engaging writing style and design, the people who need it most probably won't get through it."