It's my last column of the year because I'm on holiday as of today. So to celebrate, I'm doing my annual round-up of what I've learnt (as, hopefully, have you) over the past 12 months.
But when I look back, I wonder which year we are actually in.
Think about the personal finance issues and challenges we've faced during 2012.
A serious lack of financial literacy. A dearth of home contents (and other) insurance. Rental scams. Volatile stock markets. Low deposit rates offered by banks. Unregulated cold-callers from the financial services industry. Bad customer service courtesy of the banks. Living beyond our means. The global financial crisis, just to name a few.
Although my calendar says 2012, I thought perhaps I was having a déjà vu moment and that it was actually 2011. Possibly even 2010 or earlier. While I'm happy to go back in time and lose a couple of years off my age, it has to be said that our experiences this year are similar to last year. And the year before that.
Which makes me wonder: are any of us learning from our financial mistakes?
Sure, there are some issues we have no control over, such as the continuing march of the financial crisis that no economist has yet figured out how to stop. Then there's losing our jobs because our companies can't afford to pay us any more.
We have no say in what deposit rates our banks offer us in return for our hard-earned money (although we can do some due diligence and vote with our feet if we so choose). And stock markets, as we all know, are as fickle and complicated as ever.
But there are some things we can do to take back control.
Financial literacy I've spent a lot of the past year writing about the importance of financial literacy. Not just for us grown ups, but also for our children. If there's one vital issue that has emerged from the financial crisis, it has to be our knowledge of financial literacy. Or, should I say, our collective lack of it. Knowing how to manage our finances in a responsible manner puts us in control of our financial futures. How to budget (and stick to it), how to save, how to invest sensibly, how to avoid the temptation of spending on credit. Setting up a rainy-day account that will give you six to 12 months to get back on your feet if you lose your job or, worse, have an accident. It's all about going back to the basics. At the end of the day, it's about making your money work for you, not others in the form of high interest credit-card payments or multiple loan repayments. It's not worth it. Believe me.
Protection I've said it before and I'll say it again: insurance protects you, your family and your belongings. The residential tower block fires in Sharjah and Dubai this year are a stark reminder that insurance is a necessary fact of life. Don't rely on the owner's building insurance to reimburse you for what you've lost. I can assure you that it won't. And it won't cover the cost of your emergency accommodation, either. Did you know that about 90 per cent of the UAE's population does not have contents insurance? Is it worth it? Perhaps you should ask the hundreds of people who were made homeless by the Tamweel Tower blaze in Dubai last month. I'm sure they would tell you that they wished they had taken out a home contents policy, which can cost as little as Dh250 a year. Yep. It's that cheap. And should be made mandatory like car insurance. Life and income protection wouldn't go astray, either.
Rental scams OK, so there's not a lot you can do if a rogue agent does a runner with your rent, as thousands of Dubai residents discovered a couple of months ago. But did you know that this ridiculous insistence by landlords and agents that we pay a year's rent up front isn't a legal requirement? I didn't either until recently. We have the power to change this. But we need the numbers. Start questioning it. Offer to pay your rent quarterly or even monthly if you can. Anything to minimise your loss if something should happen. And ask to see the title deed and the agent's licence. As the experts say, it's all about due diligence.
Cold-calls My pet peeve. Don't entertain them, don't talk to them. Simply hang up on them. And under no circumstances should you pass on the numbers of 10 friends in return for a "free consultation" - unless, of course, you want to lose said friends. Those cold-calling cowboys from financial services firms are a blight on the industry and the practice should be outlawed in the UAE, like it is in other countries. If you are looking for a financial adviser, ask around. Word of mouth, after all, is the best form of advertising.
Stock markets Average DIY investors are often left scratching their heads as they try to figure out the manic highs and lows of global indices. It takes a brave person to take the plunge these days. But if there's one lesson I've learnt from markets this year, it's not just about the price of a stock. It's also how much of a dividend you'll be getting in return for your investment. Aim for global blue chips that have a history of paying healthy dividends. But remember, don't put all your eggs in one basket, more so if there's another global meltdown. And never, ever borrow to invest.
Financial crisis It never stopped. At least that's my opinion. As the dominoes continue to fall, it is vital that you shore up your finances, pay down your debts, pay off your credit cards, have an emergency fund tucked away, invest wisely and don't take any risks. Get smart and learn as much as you can. And make sure you pass those lessons on to your children. But wait, I'm back to financial literacy.
And there's my lesson: smart money skills will help you to take control of your finances. Happy New Year - may it be healthy, wealthy and wise.
