Budgeting for life changes

Budgeting for a family

By Gautam Bhatia

“Family is the source of inspiration, strength, and burden – unknown”.

For early childhood to our late teens, our family has provided us with the comfort and resources to sustain and even enjoy a life of luxury.

U.A.E is consistently ranked in the top 10 most expensive cities in the world, progressively getting more expensive as we raise a family.

Based on the most recent data from the Consumer Expenditures Survey, in 2015, a family will spend approximately $12,980 (AED 47,687) annually per child in a middle-income ($59,200-$107,400) two-child, married-couple family.

You must be wondering this is a lot of money.

For a middle-income family, housing accounts for the largest share at 29% of total childbearing costs. Food is second at 18%, and childcare/education (for those with the expense) is third at 16%.

In the MENA region, and especially in the U.A.E, education, and childcare are not safety nets provided for by the government. These are out of pocket expenses that tend to progressively increase as the child ages and increases even further as the number of children in a household increase.

This makes budgeting for family and budgeting for children and extremely important exercise, especially when you only have your income to depend upon.

Let’s look at 2 things that you can start from today to plan for the future:

1. Calculate Outgoings

Outgoings are everyday expenses and saving that are incurred as a course of living your life and maintaining a family.

Outgoings can be divided into the following:

  • Every day expenses include coffees, lunches, cinemas, phone credit, take-outs, transportation, etc. Keep receipts for each item you buy and enter the cost of the item in your Finllect app. If manual entry seems difficult, scanning your receipt works too.  Monitoring these over a week or month will give you an idea where the money is being spent, where your indulgences are going too far, and what you must do to save more.

A rough estimate of outgoings in Dubai for a middle income 2 child family are as follows:

Regular outgoings

  • Nappies Dh100
  • Toys Dh100
  • Groceries Dh1,500
  • Nursery (per term) Dh12,000
  • Cleaner Dh500
  • Classes and activities Dh500
  • Playdates Dh1,200
  • Health insurance (full family) Dh15,000 (per year)
  • Flights home Dh21,000 (per year)
  • Holidays Dh30,000 (per year)
  • Bills Dh3,000 per month 
  • Ongoing expenses – include rent, gas, electricity, TV, phone bills, school fees, wages paid to domestic help, etc. These expenses are easier to manage as bank statements and regularity of such bills will give you a good idea of how much you are spending, however, these amounts tend to be larger in value, and can get away from you they aren’t tended too. Loans & debts, including your monthly/weekly repayments, are important expenses. Write down how much you still owe on your mortgage or loans and the time it will take to repay them in full.
  • Savings – You may have regular savings in deposit accounts and credit unions. List all savings/ deposits you make regularly. To get a full picture of your finances, record the amount of money you have in all savings accounts as part of your financial health check. Bank statements and budgeting apps are a great tool to monitor your savings.

2. Identify your Goals

Saving for your child’s education, paying off credit card debt, or starting an emergency expense are all possibilities with family. When you have a goal, you will find it easier to stick to a budget. Once your goal is identified, you need to work out how much it will cost and how you will achieve it. List your goals as follows:

  1. Short Term (Holiday/ Birthday celebration)
  2. Medium Term (Home renovation)
  3. Long Term (Education plans for your child/Retirement plans with your spouse)

Spending time and making memories with your family is often the most valuable asset you own throughout your lifetime, managing your outgoings and setting goals are just two ways to make the best of time you’re lucky to spend with family members.

Are there any other ways you have found to be useful in budgeting for a family? Comment Below!

Till next time

Always Remember

Mindfulness Matters!

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