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Solving the budget puzzle, The National, 12.06.2010

If you have a family with small children, the pieces of even the most thoughtful spending plan rarely fit together on a regular basis. We take a look at two families, one in Abu Dhabi and one in Dubai, to see how they attempt to keep their expenditure in check. Jo Wadham reports

For those with young families, life is so unpredictable that sticking to a budget can be a challenge of Olympic proportions. Take Colin and Rebecca Taylor, a couple from the UK with three teenagers: Jessica, 17, Alice, 16, and Campbell, 13. Last month, after dutifully sticking to their budget, Mrs Taylor was looking forward to spending a portion of the family’s savings on a new maxi dress, which she hoped to wear to a special brunch party.

But then, disaster struck. “We had an unexpected phone bill,” says Mrs Taylor, who moved to Dubai with her family 10 months ago. “It seems we haven’t been charged since we moved in. That came to Dh4,800. “So now the budget is blown – there’ll be no maxi dress and no spare money this month.” With a busy household and, at the time, two full-time jobs, the Taylors had assumed the telephone bills were being charged monthly to their credit card. Unfortunately, this hadn’t happened.

Indeed, family budgets rarely go to plan. As with the Taylors, financial catastrophe might be lurking around the next corner. So how can families get a grip on their expenditure and save prudently for the future? To help find the answer, we asked two families living in the Emirates to share what they spent last month, on everything from car payments to exercise classes. Then, 31 days later, Personal Finance checked in to see how they did. How tidy do they keep their financial houses? Let’s find out.

The Taylor family

Colin and Rebecca Taylor live in Dubai and arrived in the UAE 10 months ago from the UK. Mr Taylor, 40, retired from the British Army, now works for a company in Abu Dhabi. Meanwhile, Mrs Taylor, 38, had worked as a project manager, but is unemployed and looking for work. They live in Jumeirah Islands with their three teenage children.

The Taylors are hoping to use their time in the UAE to balance their books and set them up for the future. And budgeting has presented its fair share of challenges. “In the UK, we were constantly overdrawn and had big credit-card bills,” says Mrs Taylor. “We’ve always set an amount each month and we’ve always had to.” The combined effects of starting a family very young and the financial limitations of an army officer’s salary meant they started off their financial family life on the back foot. About eight years ago, the couple bought their first piece of property – a holiday home in France – for which they still make monthly mortgage payments.

“I had three children by the time I was 24,” Mrs Taylor says. “We couldn’t afford to get into the property market and because of that could never get on the property ladder.” Their move to the Emirates was partly a financial decision, but also a chance for Mrs Taylor to return to the country where she spent much of her childhood. “I grew up in Sharjah and really wanted to go back,” she says. Mrs Taylor says her father worked for Spinneys in the 1970s, and the family lived in Dubai and then Sharjah for eight years before she went back to the UK to attend boarding school.

Now that they are in the UAE, the family enjoys a more comfortable standard of living, while at the same time paying off their mortgage and putting away money every month for their children’s university fund. Fortunately, schooling for the three teenagers is mostly covered by Mr Taylor’s company, although the family does pay Dh3,000 to make up the difference. By far the largest single item on the Taylors’ budget is the finance on their two cars. However, this is a two-year loan, so after another year, they will have a great deal more to play with. Petrol is a significant amount at Dh1,600 a month, mainly due to Mr Taylor’s daily commute to and from Abu Dhabi.

The grocery bill is the family’s second-highest expenditure at Dh6,000 per month, but with five healthy appetites to feed, this cost isn’t surprising. “I try to shop at Carrefour and Géant, but do prefer to shop at Waitrose and Spinneys – I find I waste less when I shop there,” says Mrs Taylor. Having teenagers in the house is also expensive because they each receive pocket money of Dh150 a week, not to mention that they need to be taken out and about more, adding to petrol costs.

The Taylors overestimate their expenditures in the budget to enable them to have a bit left over at the end of the month. “We always allow a buffer,” Mrs Taylor says. “That’s how we have our perks, our ‘happy moment’ at the end of the month.” Then, having taken out money for their savings and mortgage, the family sees how they have done and decide how to spend anything left over. While this system has worked in the past, the month of May was disappointing, Mrs Taylor says, with an unpleasant Dh4,800 phone bill.

The monthly taxi fares also came in well over budget at Dh800, although they managed to save a little on the DEWA/Palm Air bills and on groceries. But overall, the Taylors are optimistic about the future. “We are financially quite stable now and in another year the cars will be paid for,” Mrs Taylor says. “The future looks good, which it didn’t in the UK, but we need to keep it real here. “But we have no regrets. If we look at our lives now, we are really enjoying the sunshine and we will be able to afford to send the children to university.”

The Davies family

Jay Davies lives in Abu Dhabi with her husband, Nick. The couple have two young children – Mia, three, and Jake, three months – and moved to the capital from the UK in 2007. Mr Davies works as an architect and his wife stays at home to raise the children. While they now try to adhere to a family budget, Mrs Davies says she has had limited success in the past. They started to keep a budget back in the UK partly to straighten out Jay’s financial habits.

“I was rubbish with money,” Mrs Davies, 32, says. “I was frightened to open my bank statements and they just used to pile up.” Fortunately, her husband learnt the value of budgeting before they met, through his own struggles with money. He graduated from Brighton University in the UK with about £5,000 (Dh26,600) in debt, which seemed like a large mountain to climb at the time. “I took a student loan out every year, not to help me live, but just to spend,” Mr Davies, 39, says.

“I think I bought a guitar with one of them, then couldn’t pay it back. I learnt my lesson. Being in architecture as well, it’s a seven-year course, so that’s a lot of student loans.” With their financial woes in the past, the Davies have been responsibly budgeting since January last year by using a spreadsheet, and dividing their various costs into categories. The goal is to save up a nest egg to give them flexibility when they return to the UK.

“We decided that we’d had a really good time here the first couple of years,” Mrs Davies says. “Whatever we wanted to spend, we did, and whatever was left at the end of the month we saved. Then we figured that we are not going to be here forever, we want to save to be able to go home. We had an idea of how much we wanted to be able to save, and tried to figure out how much we needed to live.” Unfortunately, as with so many families, the onset of the financial crisis was a stumbling block. The family’s income has been affected with a decrease in rental income from their house in the UK, “so making the numbers work is a bit more of a challenge”.

On the other hand, the dip in the sterling exchange rate has benefited them in terms of the amounts they send home. When the rate is low, they send more money home and tighten their belts to compensate. The Davies bought their cars outright when they first arrived in the UAE three years ago, using their UK savings, which has relieved some pressure on the monthly budget. The largest single item they budget for is Dh4,200 for groceries, including nappies for baby Jake.

Mrs Davies’ “living costs” include buying clothes for her and the children, as well as coffees and lunches out. Meanwhile, Mr Davies buys his lunch and other incidentals from his monthly allowance of Dh1,000. So far, the expenses they mapped out for the month of May had gone to plan. Other categories, such as Mia’s nursery fees, dinner and entertainment, and petrol were also in line with their budget.

But there were a few bumps along the road and, bizarrely, they both ended up costing exactly the same amount of money. First, Mrs Davies incurred a Dh500 parking fine, which after a reduction for early payment but also a credit card fee ended up costing Dh381. Soon after, there were unexpected costs for the baby. “The vaccination costs for Jake were not factored into the budget,” Mr Davies admits. “It cost Dh381; quite a lot when you think they are free at home. I didn’t realise they were not covered by our new health insurance policy.”


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