The idea of “financial stability” has always been fluid — it is open to several interpretations. However, consciously or subconsciously, people across ethnic, cultural, and geographical boundaries find themselves pursuing their own versions of financial stability. Yet, when certain parameters are attributed to financial stability, many are faced with a grim reality. Turns out, in one such study(1), 70% of people in UAE were found to have no savings and 55% were said to have outstanding loans. So, what sets people in seemingly endless cycles of debts and inadequate savings? While an unstable financial situation has multiple causal factors, lack of financial literacy is widely considered to be the root cause. 

Financial literacy

In another reputable survey(2), around 43% of respondents in the UAE between the age of 16 to 24 said they are not ready to manage their own money, while 53% believed schools do not prepare them enough. This soon-to-be-employed population subset will navigate the complex world of financial management and some will inadvertently end up in vicious cycles of debts, struggles, and associated lifestyle setbacks. It is to this end that financial literacy takes precedence, enabling people to make effective decisions that will go a long way in their lives. At a rudimentary level, financial literacy stands for awareness of personal finances, different savings and investment options, besides the ability to manage risks and minimize the impact of unexpected setbacks. 

How FIST Score can help

The Financial Stability Score Tool (FIST) score is, as the name suggests, a way to determine one’s financial health. Previously determined using manual calculations, the FIST Score is now easily accessible through algorithm-oriented digital calculators, offered by many financial service providers. The algorithms will factor in retirement savings, life insurance, emergency funds, and earnings, among other pertinent details to determine your financial stability or the lack thereof. The importance of each feed, and its correlation with financial stability, can be explained as follows. 

Age, income, and spousal support

Every age is associated with a certain financial outlook, although it need not necessarily be. A student typically has education loans, a middle-aged professional has a home loan, etc. Furthermore, there are different income brackets, which have a direct bearing on financial stability. FIST takes these into account while giving the option to include spousal age and income, in case you have joint expenses and finances. 


The cash in hand or liquid assets are vital because they determine your financial health in the aftermath of an unforeseen setback such as job loss, medical emergencies, etc. There are instances when people who possess considerable illiquid assets have had to make a distressed sale due to a lack of liquidity. As a result, liquidity becomes integral to the notion of financial stability. FIST takes total cash/liquid savings into account. 


Firstly, one must understand that debts are designed to help you temporarily but drain you as long as they are outstanding. This is perhaps why financial institutions are keen on giving away loans. As debts accrue, they take their toll on your financial and emotional health, affecting your ability to plan your retirement and live your aspirations. When you do not pay your debts, it makes you less creditworthy. However, since debts are part and parcel of life, they do not per se reflect poor on your financial stability as long as you have a robust repayment plan. FIST takes into account your outstanding loans, balance on mortgages, home loans, credit card debts, auto loans, and student loans.

Investments and retirement plans

Another question that elicits subjective answers is ‘how much is enough for retirement?’ If you intend to retire early and continue to sustain the same lifestyle and spending habits, you will have to provision for them beforehand. Lack of inflow and continued outflow can become unsustainable without sufficient planning and execution. Most often, people make strategic investments, putting aside a portion of their earnings into retirement funds. At any point in your life and career, such investments or savings must be factored in when determining your financial stability. 


The availability of life insurance provides a safety net in the event of the untimely death of a primary earner in the family. It gives beneficiaries the financial relief to sustain the existing lifestyle without compromising or having to work extra. FIST, therefore, factors in existing life insurance for assessment of financial stability. 

After the values are fed, the algorithm returns a composite financial stability score on a scale of 0 to 100. In one such reputable algorithm(3), each band of 25 is designated with a colour too. If the FIST score is 0 to 25 (colour red), your financial situation constitutes “unstable”; 25 to 50 (colour orange) means “somewhat unstable”; a score of 50 to 75 (colour yellow) denotes “somewhat stable”; a score of 75 to 100 means “stable”. Regardless of your FIST score, there is always room for improvement, but the required efforts and advice vary. If anything, it is a reality check to get your finances and priorities in order before your financial health deteriorates further. 

Steps to improve financial stability

There is no one-size-fits-all approach to achieving financial stability. It requires multi-lateral efforts and, yet, circumstances could hamper one’s prospects. At the Continental Group, our general advice is to first look inward — introspect on your credentials, abilities, challenges, and scope for betterment. If you see a skill gap, then invest in education. It pays great dividends in the long run. At the same time, it is important that you choose a career that you truly enjoy. This ensures that you do not work a day in your life but do something that gives you joy. 

If you are new to financial planning, you can start by tracking your expenses. This will help you set a budget. And when you do, ensure you provision for emergencies and discretionary expenses. Once you have a savings-oriented budget, the next order of business is to adhere to it, without making constant exceptions. In the due course, your savings will grow, enabling you to invest in different asset classes and rake in returns. At this stage, saving and investing become a habit — something that you cannot lose easily. In case you have outstanding loans, you’ll be well-positioned to repay them earlier than the stipulated time. 

This is a process that, by design, will propel you towards greater financial stability. Soon, you will attain greater clarity on the savings required for your preferred age of retirement. Thereon, if you do not lose sight of the big picture and continue to stick to your goals, you are well on your way to financial freedom and stability. You will not only be able to meet the present needs of you and your family but also provision for a future where you may or may not be around. 

At any point in time, whether you find yourself with a FIST score of 0 or 100 or anything in between, a financial advisor can help you make the most of your current situation. Because financial stability has no set criteria, each person requires customized planning based on individual goals, circumstances, finances, age, earnings, etc. If you’d like to discuss your options with an advisor who will build a tailor-made strategy as per your personal needs, please write to us at Clientservice@cfsgroup.com for a free and extensive consultation.


  1. https://www.middleeastmonitor.com/20180627-70-of-people-in-uae-have-no-savings/
  2. https://www.thenationalnews.com/business/money/teach-your-teenager-how-to-save-and-budget-1.936529
  3. https://www.fistscore.com/do/home



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