Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery. — Charles Dickens, David Copperfield
Arab News runs a story on a Kuwaiti economist’s pointing out that Saudi families are spending too much money; more money than they earn, in fact. It’s not just Saudis, he says. Gulf Arabs are a consumer society and they need to get over it.
Part of the reason is indeed extravagance, but some of it is necessity, too. I find the typical Saudi income to be rather low (though nowhere nearly as low as that of foreign workers). Things tend to be expensive in the Kingdom, too, if they’re not being subsidized by the government. The inverse of the typical pattern of locally-produced goods costing less than imports is very much the case. Local lamb, for instance, can cost multiples of the cost of Australian or New Zealand lamb.
Still, over spending is a problem that needs to be addressed. It’s part of the ‘attitude adjustment’ that Saudis need to make as they move toward a ‘post-petroleum’ world.
Saudi families spend twice what they earn
MUHAMMAD HUMAIDAN | ARAB NEWSJEDDAH: Saudi families spend nearly twice what they earn, according to Kuwaiti economist Jassem Al-Mutwwa.
“Education, amusement and eating out account for more than 181 percent of a family income in Saudi Arabia,” said Al-Mutwwa who delivered a lecture on personal finance in Jeddah on Saturday.
According to his research, Saudi families overspend on personal articles and services by an average of 8 percent.
However, he noted the money spent on housing and health care was considerably less than in other parts of the world. “While only 44 percent of the family budget is spent on housing, health care represents 39 percent,” the speaker said.
He also noted that Saudi families spend ever more each month on hotels and cafes, beverages, personal articles and services.
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March:09:2010 - 21:59
Hmmmm consumer societies tend to have this problem, eg the US has high rates of personal debt on credit cards, overdrafts etc. So has new wealth (in historic terms) brought new bad habits of consumerism? or is something else at play?
March:09:2010 - 22:05
Well, I think there are a lot of different ‘human factors’ at play. Sudden wealth tends to make people go a bit crazy as they don’t have any real habit of conservation or savings. It’s reported that nearly all lottery winners who take their winnings in cash (rather than as an annuity) end up blowing the whole thing within a year or two. I suspect that that plays out similarly for Saudis and every other group.
March:09:2010 - 23:37
with all due respect, the Kuwaiti “Dr” is not an economist and he is actually a family-related knowledgeable guy.
also you, and arabnews, misquoted him and misunderstand the message.
he meant that spending increased by 181% which doesn’t mean overspending always. may be 10 years ago saudis used to spend 100 riyals but now spend 262 riyals.
if saudis spend twice what they earn then all people would be in debt.
arabnews needs to learn math again
March:09:2010 - 23:46
Thanks for the clarification. I went by what Arab News reported.
Actually, there are a lot of very over-extended Saudis. That’s what made the piece believable as printed.
March:10:2010 - 01:19
hatim alsuhaibani–thank you for the clarification. It is common that people do function with high debt loads as has been seen in the US recently. Your explanation is much more heartening.
March:10:2010 - 03:37
Everyone seems to overspend, a friend of mine from the Philippines told me about the yearly fiestas that they have and everyone wants to be like or better than The Joneses, and they spend what they make that year to impress.
If people did not spend too much then rich dad poor dad, or how to be a millionaire in x amount of days would not be best sellers.
But yes, people in Saudi live on the edge, and with all the new restaurants, private schools, new gadgets, etc etc… it is very hard to stay within a budget.
March:10:2010 - 07:27
I think that every culture has certain ‘occasions of financial sin’: Weddings, ‘Coming Out’ parties, Quinceanera, Mahr, etc. But as you say, keeping up with the Joneses seems to be pretty commonly spread throughout cultures.