An expatriates generous salary does not always come with the knowledge of how to make the most of that extra cash.

A recent Standard Life study on the saving, spending and investment behavior of western expatriates across the UAE shows that while the country offers an ideal environment in which to live, work and save that many take full advantage of, just as many are looking to splurge on a better lifestyle.

According to the research, while 94 percent of the 200 people surveyed said the spend the bulk of their disposable income on savings and investments, 97 percent also admitted to splashing out on luxurious lifestyle choices. In comparison, luxury spending among respondents was much lower in Singapore – at 51 percent – and in Hong Kong – at 47 percent.

“Many western expats in the UAE come to live here because of the countless opportunities that this country has to offer, of which one of the biggest benefits is the tax free salary,” says Chris Divito, Standard Life’s chief executive for the Middle East.

“A tax free income provides a great opportunity which may lead to relatively higher savings and in turn allow expats to save more on a regular basis. We believe our research offers consumers a glimpse into their various savings and spending habits and creates an opportunity to revisit any financial issues they may have.”

However, the temptation to spend on a better lifestyle does not always factor in rising living costs, including higher rents, food prices, utility bills and school fees.

“We have been here for seven years now and our savings are minimal,” says Helen Flanagan, a British teaching assistant in Dubai. “The school fees are astronomical and the international package my husband receives now barely covers basic necessities. It seems we spend a lot more here on rent, schooling, food and utilities than we would at home. The UAE offers a fantastic lifestyle and a wonderfully safe environment for the children, but when it comes to saving as well, that is nigh on impossible.”

Financial advisers in the UAE say that keeping a detailed record of income and spending will typically show that a greater amount of money goes unaccounted for here than in other countries.

This usually goes towards socializing and family lifestyle choices and is the sort of spending that could instead be used to build savings.

Financial advisers say that education and improving one’s financial literacy can help people to maximize this money.

“It takes time for people to become accustomed to having the disposable income that’s on offer here in the UAE,” says Julia Olson, a senior associate at Holborn Assets. “Few people disembark a plane at DXB and will walk straight into a financial adviser’s office and ask for help in saving for their future. There’s often a big temptation to spend in the first instance. It is our experience that people are sucked into this lifestyle and then they become ‘savings averse’.”

Standard Life’s study shows a greater number of respondents seeking professional financial advice in Singapore (49 percent) and Hong Kong (53 percent) compared to the UAE.

There may also be industry obstacles to expatriates seeking more advice and help.

“The financial services sector in the UAE is a very lightly regulated realm,” says Andrew Prince, a financial planner at Acuma. “It does not give the industry a professional sheen when a person can have one job at the end of the week and be a financial adviser at the start of the next with little or no training. The same was true of the UK in the late 1980s and that caused huge problems.”

While the way the financial services industry is regulated may go some way to explaining why expatriates in the UAE are averse to looking for financial advice, the availability of credit cards and loans may be more relevant.

Personal loans to residents increased by Dh3.8 billion in June, the sixth consecutive month of increases, according to data from the Central Bank. It was the biggest monthly increase in the three years of Central Bank records. Total personal lending increased by Dh15.3bn in the first half of this year.

An online survey this year from compareit4me.com, a UAE-based price comparison website, polled 1,832 residents on their consumer finance habits and found that 20 percent had made use of a credit card to cover repayments on a personal loan or car loan in the past six months.

“With an increasing number of UAE western expats paying off their financial liabilities, it is leading to greater strain on their long-term savings and investments,” says Mr Divito. “Financial stability is a key priority for expats, and it drives them to plan for their future, but at the same time our research has found that spending on non-essential luxury items is also a priority for consumers.”

Interest rates on UAE credit cards are higher than in many other countries and for other types of debt. The average monthly percentage rate on a UAE credit card was 2.9 percent at the start of this month, equivalent to an annual rate of 41.1 percent, according to data from souqalmal.com.

That compares with an average annual interest rate on personal loans of 6.1 percent.