x Abu Dhabi, UAEWednesday 17 January 2018

On the Money: Coming up with a family budget can be tough

Explaining to a nine year old the concept of checks and balances and ensuring you don't spend more than you earn is difficult.

Last week, I came up with the "brilliant" idea that I needed to follow a budget, which may prompt you to ask why a personal finance editor doesn't already have one. Short answer? It's a long story. OK, I rely on the questionable powers of my brain to record my outgoings, which leaves me seeing red a few times a month, not to mention occasionally seeing my finances in the red.

So I found myself a pencil and a scrap of paper and wrote it out. That scrap of paper has been lying at the bottom of my handbag since. Not the smartest move by a personal finance editor, I must say, and it certainly won't inspire others to follow my lead.

Admittedly, though, my "budget" was just a rough guide until I found the right method to record my incomings and outgoings. That's because I'm going out of my way not to enter the realm of Excel documents. Why? My life is already complicated enough without having to deal with the responsibility of adding and subtracting my personal outgoings. I'm happy to do it for others, just not myself. Which is kind of like being a chef and never cooking at home. And anyway, my daughter's maths homework is the only outside "freelancing" assistance I give when it comes to crunching numbers; just don't tell her teachers, OK?

My quest to find the perfect budget cruncher has taken a while. I've been flirting with a couple of iPad apps, including Envelopes, which I've also introduced to my daughter so we can work out our budget together. She thinks we should keep our spending to a maximum (on her) and our savings (for the future) to a minimum. I'm trying to teach her that this won't work. Well, it can work, but there'd be nothing left for your twilight years, mine in particular.

But I guess if you are nine, twilight years are just that: twilight years away.

Explaining to a nine year old the concept of checks and balances and ensuring you don't spend more than you earn is difficult. I mean, six months ago, she asked me if she could have her own credit card. When I asked why, she replied: "So I can buy anything I want, just like you."

On the surface, it may look like I've created my very own mini-me spending monster. However, I am a very responsible credit-card user. I never miss payments and I pay off the balance every month. I don't use them for frivolous things (OK, just occasionally) and I am very aware that banks in the UAE charge some of the world's highest credit-card interest rates. My daughter doesn't know this, nor does she even notice when I'm doing our online banking every month.

But when I asked how she'd pay for her repayments, she was pretty puzzled. Which gave me the perfect opportunity to get out my soapbox (once again) and launch into yet another of my rants on the pitfalls of credit and how important it was for her to understand the importance of managing money in a responsible way. Her pocket money is a good example. At the moment, she's got none because she spent it all recently. But not having a credit card hasn't stopped her from still wanting to buy things on credit from that private bank known as Mum Will Buy It For Me.

The Mum Will Buy It For Me Bank is like no other in the world, where the customers are kids who don't need cash cards, have no idea about PayWave technology and credit cards do nothing more than bring plastic fantastic treats to life.

Just the other day, my daughter asked if she could borrow Dh199 for a Wii game. "I'll save up and pay you back," she said. "That will take forever," I said, "you need to save up for it first."

"But that will take forever, too," she argued back. Like most kids, she's works in the immediate. "It's quicker if you buy it and I pay you back."

"And then you will never know the value of saving if you don't do it yourself."

We stopped there because I walked out of the store, in a tactical ploy that played on the fact that she still has a fear of getting lost in a mall. She forgot the Wii game. Fast.

And here's where I get to the budget. We need to do one urgently and we need to do it together. It needs to be interactive and flexible. And I need to involve my daughter so she can see - and learn - for herself just how important it is to budget. And to live within her means.

After all, the Mum Will Buy It For Me Bank will close its doors when she goes off to college. And it will come as no surprise because it's not the first bank to collapse. And it certainly won't be the last. Just ask Lehman Brothers.