Money & Me: 'Real freedom comes when you

don’t work for money but your money works

for you'
Abdulwahab Bahrawi, 32, is director of the Middle East and Turkey franchise of Escape Hunt, an
experiential gameplay concept he brought to the region now with five branches including Dubai
and Jeddah, Saudi Arabia, where he was born.

Mr Bahrawi worked for PepsiCo as a retail operations manager before launching his business in
Galleria Mall in 2016. He lives in Jumeirah Park in Dubai with his wife, who works for a gifting
e-commerce start-up, and their three-year-old son.

How did your upbringing shape you attitude towards money?

I consider myself lucky; I had a very nice life as a kid. My dad was a doctor and then owned a
chain of clinics. He then moved the family to Egypt and started a seaside resort. My parents
weren’t strict, but we didn’t have a culture of asking for things in our family. I have two older
siblings. We were provided for, but it was not that you got everything you wanted. When I was
13 dad sat me down and asked, ‘how much money do you need in the next two years'? He said
‘these are the categories – weekday spending, weekend spending, clothes, travel, emergency’. He
then broke it down and we agreed an amount, around $350 a month. He called it a salary. It
wasn’t the amount that mattered, it was the fact you needed to start learning how to budget. It
was important for my parents to teach us how to manage money, the value of it. I looked at other
kids and they had no clue.

What did you get paid in your first job?

In my last year of university I worked in Unilever, for a marketing internship in Jeddah earning
Dh4,000 a month. I came to Dubai nine years ago. My first job was here, an account executive in
an advertising agency in 2010. I came on holiday and a friend introduced me to someone looking
to hire fresh graduates. I had just turned 23 and earned Dh10,300; not a bad start. Then I found
the opportunity at PepsiCo.

Why did you swap a regular salary to go into business?

I was really happy, doing well, but around my fourth year came to the realisation it was not going
to be my long-term. I was travelling three days a week minimum. My wife came home one day
and said ‘you need to check out this concept’. I started looking into it (escape rooms) and tried a
few when I was travelling. I really liked the idea, dug into the business a little more and realised
the capital required wasn’t that big. We agreed a franchise deal with The Escape Hunt, the largest
in the world; I offered shares to friends and family first and they covered it. And there was my
own personal investment.
This is the flagship in the Middle East. The capital barriers of entry to this industry were very
low to start with and the payback quite quick. Spending time with family is important to me and
one of the drivers why I left my old job.

So people pay to hunt for clues and escape a room?

For consumers it’s not enough any more to be a spectator. This is a global trend. If you look at
experiential entertainment, that’s growing, whether escape games or VR. In the region, the
entertainment industry spend is growing. There’s so much potential. We get a lot of corporates;
weekdays are primarily filled with team building. When you compare us with other team
building activities, the experience is more inclusive and light-hearted - it encourages people to
communicate and work together. Our average price per person is a fifth of what companies
generally spend for traditional team building experiences.

Are you a spender or a saver?

A bit of both. I don’t hold off spending when it’s needed. Sometimes it’s nice to treat yourself
and family, but I don’t spend more than my means. There’s a tendency for people to rack up
credit card bills and loans; I’m not that person. I’m also not the person that’s not going on
holiday so I can save.

Are you wise with money?

I am. People usually save because of fear of the future. I don’t really have that; at the same time
the present is important. I want a good life in the future, but I also want to live a good life now.
I’ll look for the best way of spending, something that’s going to facilitate enjoyment. Throwing
away money was never okay.

How do you feel about money?

I don’t like giving it too much importance because it can be taken away at any minute. I feel
fortunate to have what I have. It is kind of a fuel – when you start making money is a nice
feeling; you open a business and it becomes a success, when you’re growing, it drives you. It’s a
step closer to what I feel is real freedom; when you don’t work for money is when your money
works for you. That’s true wealth. That’s a goal. It’s a nice feeling to say while I’m sitting here
this is making enough money to sustain my life.

What do you enjoy spending money on?

Holidays and travel; I got married at a young age and it was a lot of fun travelling with my wife -
the many holidays were something I don’t regret spending on. They’re experiences and
memories. They are a luxury – at the same it’s nice to reward yourself. I’m definitely happier
spending on a holiday than a car. Also, I don’t see anything wrong with splurging when
celebrating something or if you’re going to make someone really happy.
Where do you save?

Mainly in real estate funds with my immediate family. Also I’m putting a lot of savings into this
(business). I’ll save and invest in other things as well for safety.

What’s been your key financial milestone?

When this business became self-sustainable, positive cash flow, a few years ago. The first three
months I was here 16 hours a day, every day, including at reception – I still love the feeling of
taking a booking.

Do you prefer paying by cash or credit card?

Credit card; it’s more convenient. I don’t like carrying cash and when you pay cash, nothing is
documented. With a credit card, a touch of a button on your phone and you see everything
you’ve spent.

Do you plan for the future?

I don’t like to plan ahead that much. You need to stay open to opportunities. If things went to
plan all the time everyone would be successful and life would be lovely. You have to be agile, as
a business. I like to have a direction – I don’t need a set plan. That said, I do a lot of Excel sheets,
even planning for a trip.

Putting money away for education, that’s something we will continue to do. Definitely, my wife
and I want another kid.
Money & Me: 'I structure my savings by
investing in gold and stocks every quarter'
Geetanjali Kaul, 35, was inspired to co-found children's activity booking app TurtleCard while trying to
keep her son engaged in social, physical and developmental activities. Launched with an entrepreneur
friend last October, it also helps digitise small activity businesses that didn't have online payments.
Indian-born Ms Kaul has spent 12 years in Dubai and lives in Arabian Ranches with her husband, a
regional general manager for an Indian telecoms brand, and her 3-year-old son Abhimanyu.

How did your upbringing shape your attitude towards money?

My father served in the Indian Air Force in administration, which meant we didn’t have a fixed
location. Moving every two years within India you adapt fast. I would go to a new place, meet
new friends. It becomes part of your DNA when you enjoy that change.

My father spent 20 years with the Air Force before becoming head of HR for one of the big
denim-producing companies. My mother worked with the State Bank Of India, in the back
office. I was the only child. I knew what my parents could afford, so my demands never
surpassed that. Both were working, so we were comfortable. The value of money was made clear
to me at a very early stage. Growing up in India you see people less privileged understand the
actual value of money — you might have a little more but things can go bad any day.

Did you receive pocket money?

I did; 100 rupees a month (Dh5), but because most of my needs were met I would end up saving
it. There were times — I must have been aged 10 — I would give it back to my parents because
they needed money when there was none at home and something came up.

How much were you paid in your first job?

As a management trainee for Jumbo Electronics — retailers and distributors for electronics — I
was paid Dh6,500. We got housing in the first two to three years as well. That brought me to
Dubai in 2007. It helped me understand Middle East/GCC markets. You need to get your hands
dirty in retail, see the customer face-to-face, understand how he works. After five years I moved
to BlackBerry, managing UAE marketing.

Are you a spender or a saver?

You can’t be one of the two; you need to do both — what’s important is what you’re spending on
and how you’re saving. Early on (when I started earning) I spent a lot on travelling. If I’d saved
that money I’d have made a mistake because experiences I got through travelling enriched me,
formed my personality. Now most of my spending is on my business. I’ve always been saving,
but I’ve not stopped myself from spending on things that have added value or made me happy.
How do you save?

It got more structured as I got older, more responsibilities. I made an effort to save in my 20s;
into my 30s that concept had to be more formalised. Once I got married in 2012, had a child, we
said we have to save X amount on a quarterly basis in stocks and gold. We bought this house in
2015. I should have bought much earlier, not spent so much in rent, but that rent is being saved
as an investment now.

What is your most cherished purchase?

The house. Sometimes you look at the value, the monetary side, but this is cherished because I
look at my boy opening the door, running into the garden; he can play in parks, has a community.
He’s living a childhood that I lived which is unseen today for a lot of kids because of scarcity of
space.

What is your best investment?

Our vacations and experiences; going home to see family in India or exploring new countries.
We like countryside, road-tripping, taking time to understand the culture. This is enriching and
satisfying — you realise there’s a lot of goodness in the world. My latest favourite is the Nordics;
we’ve done two trips to Norway.

What prompted you to launch TurtleCard?

The idea started six months after I left my previous job, to spend more time with Abhimanyu. I
had decided I wanted to do something of my own. I was sitting at one of the activity centres
where I would take him every week. By the third week he was getting bored. I couldn’t find the
right activities to engage him in and I started meeting more mothers talking about the same
problem. I realised there was a gap in the market. I asked myself ‘why can’t it be easy to take
him to multiple places at the click of a button — there has to be a more digital way’. So
Abhimanyu is the reason for this whole thing. We’ve signed up over 2,000 customers and 50-
plus merchants, which translates to almost 350 types of activity.

How does the business make money?

The service is free to use for parents, who find activities and book through the portal. We get
commission every time you make a booking with the merchant. We help by giving them new
customers; only charging them when we bring confirmed bookings. A lot of centres don’t have
facilities to take online payments, so we’re also digitising them.

What is your philosophy towards money?

Money is basically a means to measure effort and success. It’s a barometer of your acumen,
dedication and hard work, but it’s not an end by itself. I strongly believe money saved at the right
time and spent on the right things can help you achieve great things in life.
What’s been your key financial milestone?

The first was buying my house. The second is when in the second month of TurtleCard going
live I saw billings coming through, having real customers pay money to use my service. That
was validation. You believe in your idea but you know you’re on the right path when somebody
thrusts you with their money.

Do you prefer paying by cash or credit card?

Credit card. Convenience, for sure, the cashback — who doesn’t want money back — but a
credit card also helps you review your spending at the end of the month. With cash you can keep
receipts, but it’s inconvenient to keep track where money is going.

Are you wise with money?

Absolutely. I like to spend, but I’m wise about where I’m spending. It’s not impulse or emotion
driven. I give it thought every time, more so now because a chunk of my savings is fuelling my
business. I don’t drive myself crazy to find the best deal to save Dh1. If I can make a little
saving, fine, but convenience should be a part of that.

Do you plan for the future?

We have put together a plan, quarterly savings and the business is one of our biggest plans for the
future, to bring us enough money to pay for our son’s education and fuel our vacations.

What would you raid your savings for?

You can never plan for a family emergency. God forbid something happens, you have to raid
savings. Plus if an opportunity comes with respect to my son’s education … Hopefully, if we’ve
planned well, it should cover that.
Simplify your investment strategy to make
more money
Many people assume investing is a complex business, but it doesn't have to be. Often the
simplest way is the best.

By keeping it uncomplicated you will expend a lot less effort and rack up fewer dealing charges
and fund costs, which can massively boost the overall value of your pot.

So don't allow yourself to be confused by industry jargon or advisers peddling overly complex
products. If you want to start building extra funds for retirement, Tuan Phan, a board member of
SimplyFI.org, a non-profit community of UAE investment enthusiasts, says avoiding needless
complexity is a genius move. “It was Leonardo Da Vinci that said ‘simplicity is the ultimate
sophistication’ and this is extremely relevant when it comes to investing.”

He says too many professional portfolios are deliberately and unnecessarily complicated,
containing a vast spread of asset classes including shares, funds, bonds, commodities, property,
gold, cash and advanced financial instruments such as derivatives that cancel each other out.

Advisers do this to justify their high fees, but this strategy can backfire. “These complex
portfolios end up being inefficient, unbalanced and expensive, resulting in poor performance
over time,” says Mr Phan.

When investing, charges are your biggest enemy. The more you pay each year, the harder your
money has to work to offset the cost.

Worse, many charging structures are also complicated, with upfront and annual portfolio fees and
charges on the underlying investment funds in your portfolio. This makes it difficult to see how
much you are actually handing over in total.

Offshore portfolio bonds, for example, are single premium life insurance policies produced by
global life companies and distributed through financial brokers in the UAE. These are investment
wrappers that contain a range of investments and often for a fixed term, say five or 10 years, or
for whole of life.

Meanwhile, fixed-term contractual savings plans have also been heavily sold in the UAE. Here,
instead of an upfront payment, you make monthly contributions for a set term, which can be as
long as 25 years. However, the insurance company providing the plan pays upfront commission
to your adviser, which comes out of your contributions.

Charges on both types of plan can be punitive. For example, you might pay a 1.5 per cent charge
on all your initial contributions, whether lump sum or monthly. The provider may also charge 1
per cent a year for running your plan plus there are charges on the underlying funds, which may
start at 0 per cent for internal funds but rise to 2 per cent for funds run by external managers.
Steve Cronin of UAE-based financial community DeadSimpleSaving.com says both types of
expatriate investment vehicle can charge total, disguised fees of 4 per cent a year. “This is a
waste of money when all you really need is a cheap offshore brokerage such as Interactive
Brokers, a cheap way to transfer money such as an exchange house, a cheap, globally-diversified
passive stock index tracker such as the Vanguard FTSE All-World UCITS ETF (VWRD) and a
cheap bond fund.”

The UAE insurance Authority is working on stiffer regulations designed to transform how these
products are sold, which should include a cap on the commission advisers can earn from selling
offshore bonds or fixed-term contractual savings plans, and rules forcing them to explain all fees
and commission.

Mr Cronin says a far simpler approach will still get the job done, while also slashing fees.
“Building funds for retirement relies on the power of compounding, as you earn interest on
interest, gains on gains. Fees massively reduce this compounding, and the impact is magnified
over 20 to 40 years,” he adds.

The sums are quite startling. Say you invest $100,000 and your money grows at an average rate
of 6 per cent a year. If your annual charges total 2 per cent a year (and you can easily pay a lot
more), your money will grown to $219,112 after 20 years.

This sounds reasonable until you see how much you would have if you paid just 1 per cent a year
instead.

In that case, the total money in your pot would have risen to $265,330, an incredible $46,218
more. That’s a big difference for a little 1 per cent.

Annual charges are punishing because you pay them year after year, and the longer you invest
and the bigger your portfolio grows, the more you pay.

Over 30 years the damage is therefore much greater: that 2 per cent charge would leave you
$324,340, but at 1 per cent you would have $432,194, more than $100,000 more.

Then imagine that instead of 1 per cent, you pay something as low as 0.20 per cent. In that case
your $100,000 would have grown to $542,713 over 30 years.

Now you are almost $200,000 ahead. Incredibly, this is double the amount you originally put in.

Mr Cronin says this underlines the importance of keeping a close watch on fees. “If you pay
more than 1 per cent, and certainly over 2 per cent, you may be losing hundreds of thousands of
dollars over time, all for no good reason.”

If you think it is impossible to invest and pay just 0.20 per cent in charges a year, then think
again.
Hugely popular exchange traded funds (ETFs) allow you to passively track almost every major
stock market index in the world, and some have charges of as low as 0.07 per cent a year.

UAE residents will typically buy them through an offshore brokerage platform such as such as
Interactive Brokers, Internaxx, Saxo Bank or Swissquote, or AES International in the UAE.

DIY investors can buy them on an execution only basis, without advice, and this keeps charges
down.

There will be platform charges on top, but these should be minimal. Always compare prices
when choosing your platform, to find the best deal for you.

Mr Phan says you can keep things really simple and still build a widely diversified portfolio by
purchasing just two ETFs.

His first tip is the Vanguard FTSE All-World ETF (VWRD), which has annual ongoing charges
figure of just 0.25 per cent.

This aims to deliver long-term capital growth by tracking the performance of the FTSE All-
World Index of large and medium-sized companies in both developed and emerging countries.

It holds almost 3,000 stocks in nearly 47 countries and as global markets have recovered it is up
just over 10 per cent year-to-date.

Mr Phan’s ETF bond tip is the iShares Global Govt Bond UCITS ETF (IGLO), which gives you
diversified exposure to global government bonds, and has an annual ongoing charges figure of
just 0.20 per cent.

Mr Cronin recommends putting 60 to 80 per cent of your portfolio in stocks and the remainder in
bonds “Invest regularly like clockwork and then get on with your life. It’s that simple.”

Once you are underway, you could inject a little bit of complexity by building a broader spread
of ETFs.

Oliver Smith, portfolio manager at online trading platform IG Index, which has offices in Dubai,
suggests HSBC MSCI World (HMWO), which has total annual charges of just 0.15 per cent.

You could combine that with European-focused ETF Lyxor Core Euro STOXX 600 (MEUD),
which charges just 0.07 per cent. Mr Smith also tips, Vanguard FTSE Emerging Markets
(VFEM), which charges 0.25 per cent.

You could then balance that with a bond fund such as iShares £ Corporate Bond 0-5yrs, which
has charges of 0.20 per cent, he adds.

Stuart Ritchie, director of wealth advice at AES International, recommends building a balanced,
globally diversified portfolio of low-cost ETFs such as the iShares Core S&P 500 ETF (IVV),
which has a total expense ratio of just 0.04 per cent. “ETFs like these are efficient and low cost
ways of tracking your chosen index.”

He says buying ETFs as part of a long-term ‘buy and hold’ strategy is both simple and minimises
dealing and transaction fees. “It also removes the speculation element. You’re not trying to
predict who will win or lose, you’re just buying the whole market with the view that over time,
share prices will rise.”

The annual Dalbar Quantitative analysis of Investor Behaviour study of long-term equity
performance showed that over the 20 years to December 31 2017, the US index S&P 500
delivered an average annualised return of 7.20 per cent a year, while the average in equity
investor generated 5.29 per cent.

Active trading can therefore backfire. “Investing doesn’t need to be complex, you simply need a
low-cost portfolio of globally diversified ETFs investing in equities and bonds according to your
individual risk profile,” adds Mr Ritchie.
How a 'job on the side' can boost your
finances and your wellbeing
What would you do with an extra Dh27,000 of income a year?

I recently tallied up my side hustle earnings for 2018 to find I had raked in on average over
Dh2,000 a month by playing music, taking pictures, and writing. Side jobs are a critical part of
my life, and one I think everyone should consider not only to boost their income but also to
develop their passions.

Not everyone is as positive towards freelancing as I am, particularly if they don't have the
relevant paperwork or approval from their employer to work on the side. If you turn your
passions into earning potential, you will never have any boundaries and you'll be burnt out from
working all the time. Plus your ego might be bruised if people criticise your work in any way
because you care so much.

But those who cast aside the side hustle are losing so much more than extra income. I am
passionate about side hustles, so here are the four main ways earning money from my hobbies
has changed my life:

• You save more

This is a pretty obvious one but I paid off my student loans in three years due to tutoring,
photography (both running a photography teaching business and actually taking photographs),
and music. This allows me to save over 60 per cent of my monthly salary without losing any
quality of life.

• Improved mental health and well-being

When you don't enjoy your job for whatever reason, your whole life is affected. But if you have
two or three other income streams and your job loses its lustre, you can secure the joy and
validation you need from outside the 9-5 grind. Hobbies you can earn from provide something to
look forward to, and the opportunity to develop different sides to your identity.

• A wider social circle

Making friends in adulthood can be hard. If you're only friends with those you work with, the
odds are that you're going to complain a lot to each other about your jobs when you're hanging
out. This can reinforce negative psychological elements and leave you depressed and stressed.
But if you find your tribe of others who are also obsessed with whatever you love, that feeling of
community can bolster your whole life. This is especially true if you enjoy doing something very
niche, which can be isolating.
• You spend less

If I'm out making money from freelance gigs, I have less time to spend it. For example, when I
was playing music at a fancy brunch on Fridays, I wasn't spending money at fancy brunches
myself.

"OK, side hustles sound great, but I don't have one and I don't know how to get one," I hear you
say. Well, fear not, dear reader, because I have you covered. Here is my patented five-step
formula for building a creative side hustle.

1. Find what you're curious about

Let your curiosity become an obsession - go down the rabbit hole, so to speak, to learn about
your chosen passion. YouTube is a fantastic resource, as are blogs or groups that are into the
same things as you.

2. Practice - start creating, fail and fix

Share what you've created - give presents, show it off on social media, visit online forums and
more.

3. Keep learning

This won't feel like a burden, because it is something you are personally interested in. You'll fight
for time to do it; other pursuits will fall by the wayside.

4. Start charging

It's hard to know when to do this exactly. For me, it was an organic process that happened once I
was making things that people got value from. Start low at first and build your brand. Under
promise and over deliver.

5. Understand the Talent Stack concept

The Talent Stack, as defined by its creator Scott Adams (of "Dilbert" fame), is the idea that you
take the skills you already have, and combine them in creative ways to find a good side hustle or
passion. This is great because it's hard to be the best in the world at one thing, but you can be
good at three or four things that you then combine to make a talent that is uniquely yours. Scott
Adams talent stack was that he could draw a bit, he was fairly funny, and he had worked in
Corporate America. Thus, "Dilbert" was born. For me, I have no fear about performing in public
(thanks to music), and I am obsessed with personal finance, so I have been completely
comfortable with being on the radio. Indeed, this article is a direct result of my talent stack of
writing and personal finance.

If you're overwhelmed and are barely able to keep your head above water with your current job
and life, freelancing on the side may not be for you. But for me, besides making my financial life
less stressful because I have more money, they ease the demands of everyday life because of
good friendships and a more positive outlook. Side hustles are worth making time for.

Why we are bad at managing money and

what to do about it
“Money, I don’t know where it goes. On payday I have money, then, far too quickly, it’s just …
gone. I feel trapped in this endless cycle where I can’t get ahead!” I can’t tell you the number of
times people have told me this, or something very similar.

In my experience, it seems there are five main factors keeping us from being successful money
managers. There are also five fixes, one for each problem, to help you straighten out your
finances.

Problem 1: we don’t track our spending

Unless you have a tracking system that works for you, you won't be able to tell why you aren’t
reaching your financial goals. As the saying goes, “we can’t control what we don’t know”.

Solution: get a free spending tracker app on your phone. I use Spending Tracker — free on iOS
and Android. It takes 30 seconds to enter all your daily purchases and put them in their proper
categories. Once you have this information, you can make better choices about where you want
your money to go. It also helps identify trends that you wouldn’t spot otherwise, like when I
realised my car was my greatest expense last year.

Problem 2: our brains are conspiring against us

When we make a purchase, our brains send a spike of dopamine into our systems, leading us to
feel a temporary jolt of happiness. This quickly fades, leaving us wanting more: more purchases,
more dopamine, less money. And because there is always more stuff to buy, thanks to the marvel
of modern capitalism, we can never really get enough.

Solution: do free fun stuff and achieve that same dopamine spike as when you make purchases.
If you’re able to enjoy free activities — a hike, playing board games or yoga in the park — you
can start to break the connection in your mind between spending money and happiness.

Problem 3: advertising works

We live in a world drowning in advertisements clamouring for our attention. It is so omnipresent

we don’t even register its effects on how we consume and act. Before we know it, we’ve spent
far more money on things we suddenly need to have, all because of advertising. This can blow
our budgets.
Solution: stop impulse buying. My system for this is to wait three days from when I first feel I
have to get something. If I still feel strongly that I need whatever it is after that time period, I will
shop around to see if I can buy it second-hand first. If I can’t, I’ll buy it new, but try to get it
cheaper. Giving myself that three-day buffer lets me decide if it’s something I really need, and
usually, it’s not.

Problem 4: we admire people that own luxury cars, yachts and

designer clothing

There’s a reason we watch Keeping Up With The Kardashians and not Keeping Up With The
Dalai Lama, because we all dream about what it would be like to live that crazy life with only
the best stuff and experiences.

Solution: realign your thinking and realise those people are chained to jobs in order to have
enough money to buy all that expensive stuff. Once you have a grasp on managing your money
and start reaching your financial goals and lowering your spending, you won't need to be trapped
in jobs you dislike. You can just leave; that freedom is worth more than a fancy pair of shoes or
an expensive luxury car.

Problem 5: we think investing is too complicated

There is an infinite number of ways to invest, and it can feel intimidating to pick the right one to
grow your wealth and not get caught out by bad investments. Many “financial advisers” also sell
complicated products with pages of fine print. Sadly, those products are made intentionally
confusing so that investing stays mysterious and we keep giving our money to these
“professionals”.

Solution: learn about index fund investing. It’s easy to set up simple investments for yourself
that even Warren Buffett, the greatest investor alive, recommends. Simply buy index funds and
forget about them.

Managing our money wisely, spending less than we make and investing the difference
productively can allow us freedom in our lives to pursue our passions. We can do the work to
determine what it is that makes us feel alive and passionate, not just what we need to do to
survive financially. Isn’t that how you’d like to live?
How to avoid making bad financial decisions
We all make bad financial decisions at some point. What is important is to avoid doing it again
by examining the reasons why you made them in the first place. There are certain factors you can
control and others you can’t. Here are a few pointers to help you navigate a more financially
sound path.

The top factors affecting your ability to make decisions are being poor, stressed and tired. You
don’t have to be all three to suffer financial consequences. But if you are, then you’re on to the
road to a very bad place.

The World Bank’s report Mind, Society, and Behaviour published in 2015 states that the minds of
the poor are taxed by the decisions they have to make daily — because they’re poor — and so
they go on to make more bad financial decisions. It is a vicious cycle because their brains are
tired and maxed out.

Even if you are not poor, living with chronic levels of stress can have the same effect. A 2013
Science Magazine article associated this cognitive deficit — this preoccupation with daily issues
— with a loss of 13 IQ points. This is equivalent to losing an entire night’s sleep.

Studies show that people who are sleep-deprived make increasingly risky decisions, the longer
the sleep deprivation lasts. What’s worse is that they don’t recognise or realise what’s happening
to them. A small study published in the Annals of Neurology showcases this by comparing two
groups — one sleep-deprived, the other not. Most of the sleep-deprived group was unaware that
their appetites for risk were increasing.

Other factors that influence the financial decisions we make include too much choice, peer
pressure, not doing the basic maths, lack of self-control and even our DNA.

The reality of today’s world is there is just too much information out there. Too much choice
leads to feeling overwhelmed and ultimately shutting down.

A 2000 Columbia University study involving jam jars and choice showed that the more jam jars
there were to choose from, the more likely decisions were not thought through carefully. People
were invited to take a jam jar home for free. The group presented with three to choose from went
through a logical process to choose what benefited them the most. Those who had 20 to choose
from made a decision much more randomly.

The same thing happens when we are presented (confronted more like) with too much
information and choice around financial products. We may opt out, stick to what is familiar or
ask a friend.

Which leads me to another mistake that should be avoided: you do what (you think) everyone
else is doing. It is so much easier to look around your circle of friends, ask advice from someone
you believe has their head screwed on right, and invest in the same thing they do. This may be
easier than dealing with data overload, but be forewarned that you will be the one to suffer if it
goes wrong.

Sometimes bad decisions are just a result of bad maths. OK, that might be a bit harsh. But what I
mean is: it is challenging to have the big picture of the minute details of your financial life in
your head. It is important to do the basic maths, keep track of your expenses and your savings,
and then connect the dots. For example, people can be in (expensive) credit card debt, but keep
the money that could pay it off in a savings account that pays near nothing.

Having self-control — shown to be an indicator of ‘success’ — is another factor. In the famous

marshmallow test, young children were left in a room with a yummy marshmallow. If they
waited until the nice person with the marshmallows came back, they would get two. If they ate it
before the person got back, well, they weren’t headed for greatness going by the experiment’s
findings.

Finally, your DNA could be to blame — specifically the variant of the COMT gene you inherit.
The gene research that looks into this is controversial, but a study by the University of North
Carolina links a variant of the COMT gene and the tendency to make impulsive decisions.

This last point may be beyond your control, but now that you are aware of the factors influencing
your financial well-being, it is time to make the necessary changes. Remember, even if you can
blame someone else for your bad financial decisions, you are the one who will be living the
consequences.
Couples who adopt ‘financial singledom’
have a recipe for success
“I can’t afford to have a chat or a cup of tea with her, because I’m financially single and I need to
work.”

Financially single. I like that term. I first heard it a couple of weeks ago when a friend was
telling of her frustration when a neighbour shows up expecting tea and a chat. The person
conveying the story has to earn her keep. She works from home, but this does not mean she’s
available. Her neighbour pays for nothing, and doesn’t work. She has no concept of the
financially single’s perspective or priorities.

Financially single. Say it. How does it feel to you?

Being financially single does not mean the person is romantically single. It means that they are
responsible for earning their keep, and paying their way.

The concept sends shivers down many a spine – especially if it’s unexpected. For others, it is
liberating. It means no chaos, no one to be accountable to, and no one who can get you into any
sort of financial mess – that honour is yours alone.

I know people who become financially involved to save money – it’s one thing if we’re talking
flat-share, an entirely different universe if your relationship involves sharing other aspects of life
too – moving a relationship on to the ‘next stage’ primarily driven by monetary considerations
can go spectacularly wrong.

It’s an extremely attractive proposition though – there’s a lot to be gained if the results of a dated
study by Ohio State University are still valid. The study found that married people experienced a
per person net worth increase of 77 per cent over their single counterparts. It also stated that the
combined wealth of couples increased on average by 16 per cent for each year of marriage.

The big thing for me is shared responsibility and accountability – that’s where the money is.

If you believe you can trust whoever it is you’re entering into a committed relationship with,
then you’re on to a good thing. Because yes, it does cost less when you share.

But, if they bring with them promises without delivering, or make their liabilities yours too, now
that can get messy.

Mundane examples of this: imagine your spouse promising to look after paying credit card bills,
but not doing it. Months of missed payments, along with exorbitant interest piled up, make for a
nasty shock – especially if your hard earned, responsibly saved, cash is used to pay down the
debt. More serious examples of this are things like taking out loans in a spouse’s name – using
their credit rating, and not paying the money back. I know quite a few women in this category of
financial hell.

There’s only one thing you can be in control of in life and that's how you behave. Being
financially single means 100 per cent control over what your money is used for – period.

If you’re financially single, and responsible, embrace it. If you want to embark on coupledom,
you’ve got a great base to build on – just make sure your partner to be has the same.

Let me go back to my friend who introduced me to the term - she is one half of a very committed
couple. They each have financial baggage: he has two pre-teens – she has two adult children.
They split all their overheads and joint life expenses– and keep the rest of their life’s outgoings
very separate. Some might view this as thoroughly unromantic – but for them to stay true
Valentines, this system cuts out the main reason couples argue.

With marriages for life increasingly not working out - it seems this couple has landed upon a
great recipe for success. I have a feeling more people will embrace financial singledom as a way
for living well and staying together.
When home ownership is the right
investment
An estate agent I know bought a fixer upper recently in the UK. The house was in terrible shape
with exposed live wires and no inside working bathroom. The previous resident was an aged
widower who continued to live there for 10 years after his wife passed away and refused entry to
anyone — including his children.

But despite the state of the house, the estate agent believes he will make a great profit when it
comes time to sell. When he told me about it — and how he had managed to pick it up for a
‘good price’ — the first thought that occurred is: is this a conflict of interest? By this I mean
being in a job that allows privileged access to information, or investments, before it’s known to
the public, and acting upon it.

Putting that pesky ethical issue aside, my next thought was: if you plan on your home being your
biggest investment, then it would help to be an estate agent at some point in life. I had similar
thoughts a couple of years ago, when I found out a different agent was the proud owner of a
handful of buy-to-let properties.

We’ve been conditioned to think of a home as one of, if not the biggest investment we’re likely
to make. If this is your belief, then becoming an estate agent could be a savvy move — if not for
the astute purchases, but for the insight it’ll expose you to within the sector: getting to know
which area and what makes a ‘good investment’.

What the buy-to-let estate agent did is a stroke of genius: getting to know every market
movement before the general public, and having the cash to put down when he knew he could
bag a great deal.

But wait a minute. This thinking is based on a house being a good investment. Is it?

The first thing to consider is whether it is just a house or your home. If it’s somewhere to let out
as an investment, then you need to work out the numbers to see if it makes sense.

If it is your home, you need to again figure out the finances. This is an important point to ponder,
as home equity is usually the owner’s largest asset — outweighing any other investable assets for
most.

The downside is that a house is not a liquid asset — you can’t cash it in when you want (or need)
to. It also ties up a huge chunk of your money that ‘could’ be making great returns elsewhere.

But: homeowners tend to grow wealth faster than renters. This is what a 2013 study released by
Harvard University’s Joint Center for Housing Studies shared. Having delved into the effects of
the credit crunch on this issue, the findings state that the golden rule of accumulating wealth
through home ownership hinges on it being a long-term investment.
There’s the argument that mortgage payments are in lieu of rent — after all, we all need a place
to live. Many consider mortgage payments, when capital is being paid down, as ‘forced saving’
— assuming the value of the property increases and outstrips inflation.

The key for gaining from renting a home — assuming monthly outgoings are cheaper than
paying down a mortgage — is to invest the difference. But that’s the point — it is optional, and
so most people don’t do it. They spend the money instead.

The truth is, home ownership is a complicated issue, with many variables out of our control —
such as death, divorce, political and financial fallout and more.

If you do some research around whether it’s a good investment, headlines such as “Home owners
gain X trillion as house values jump” or “Why home owners are richer than renters” scream
conflicting information.

The bottom line is this: if you can afford to live the dream and buy your home, then go for it. If
you want to increase your chance of making money from it too, then plan on keeping it for many
years.

If you don’t want to, or cannot afford to buy, then make sure you save and invest money each
month. Investing what you save on not buying (fees and ongoing costs) is the reason some say
renting is better, at least in financial terms.

Back to the idea of a clever career choice — consider becoming an estate agent at some point in
life. The lifetime opportunities are worth more than the salary — provided you can make that
down payment.

Money Saving Tips

1. Start today

Whether you start big or small, it doesn’t really matter – as long as you start. If you can’t save 10
per cent of your income, begin with just 5 per cent and live off the remaining 95 per cent. Save
consistently, even before you pay your monthly bills and debts. Find a way to gradually increase
your savings rate to 6 per cent, 7 per cent, 10 per cent, if not more. Ideally, you should put aside
15 to 20 per cent of your savings in an investment fund. What’s important is that you start now,
and get into the habit of saving and investing.

2. Pay yourself first

As soon as you are paid, split the money and put yourself on top of the queue. By paying
yourself first, you get the satisfaction of saving something for a rainy day (or your retirement). If
your salary gets deposited each month into your bank account, put some of that into a separate
account which you won’t use for weekly groceries or personal expenses. You can do a split; say
50/50, 60/40, 70/30, 80/20 per cent for expenses/savings, whichever suits you best. What’s
important is that you set a personal target and stick to it.

3. Keep two bank accounts

Have one account for your expenses and have another one for your savings. It's a simple
solution, and it’s rather helpful. Splitting the two allows you to keep tabs on your money better.
This allows you not only to physically put your money in two places, but know the amount of
money you have spent and saved up. Ideally, you should have more in your savings than in your
expense account.

4. Make your money make you more money

If you put aside Dh370 (about $100) per month – the equivalent of a cup of cappuccino a day –
throughout your working life and invest it in an average mutual fund that earns 8 per cent to 10
per cent per annum, you will be financially independent, with savings of AED 3.7 million ($1
million) by the time you retire, according to “Way to Wealth” author Brian Tracy. Even someone
who earns a minimum wage can be a millionaire if he or she consistently saves over the course
of his lifetime. Learn how mutual funds, exchange traded funds, trust funds, insurance and other
long-term investments work.

5. Keep track of your finances

Use a banking app on your phone (if it’s available) where you get a quick view of your money,
keep tabs of your balances, check your transaction history and transfer money in between
accounts. Or you can go old school and write it in a book. What’s important is to keep track of
how much is going in and going out. Keep track of how much goes where. This allows you to see
if you’re overspending, so you can cut back on things and save money.

6. Save your change

Whether you use a box, a can or a piggy bank, saving loose change is an amazing way to earn
extra money. Your 25 or 50 fils or Dh1 coin can seem insignificant, but if you round them up
later, you could easily end up with a few hundreds before you know it and then you can buy
something you’ve been wanting for yourself or add it to your investment kitty.

7. Don’t keep money in your wallet

This practice guards against your impulse to buy, especially from stores that still take cash-only
payments. If you look into your wallet and know there’s money there, your instinct will tell you
to spend it. So if you do find yourself without any cash when you walk into a store, it cuts your
impulse to spend. You can’t spend what you don’t have.
8. Don’t convert currencies

Converting everything you buy or want to buy into your home currency is silly. We’re not
earning in pounds or dollars, so we shouldn’t be thinking in those currencies. Besides different
countries have different prices depending on various economic factors. It’s a mistake that many
expats make.

9. Don’t buy a tank

With easy instalment plans and petrol being so cheap, walking into the 4x4 trap is not
uncommon. But the amount you will end up paying in monthly instalments for a 4x4 compared
to a regular car can work out to a difference of about Dh1,000. And let’s be honest, you just need
a set of wheels to get you around from point A to B.

10. Avoid the road tolls

While getting a Salik tag is not very expensive and gives you the option of using Shaikh Zayed
Road when necessary, you can avoid using it all the time. Shaikh Mohammed bin Zayed Road
and Al Khail Road are as convenient and mostly free-flowing.

11. Avoid overspending on food

Food is a necessity, but there’s no need to splurge. People tend to buy too much food, stocking
their fridge with food that eventually goes straight in the bin. Saving money on food is as easy as
preparing your lunch at home, instead of buying lunch at work.

12. Don’t waste food

If you have ended up buying too much food, don’t throw it away. Improvise. Do what all the
Nan’s in the world do… make a pickle. It’ll save you an expense on a day when you’re planning
to have some friends over. You don’t have to rush out to Spinneys to buy some over-priced
snacks. Slap some of that pickle on crackers and you’re sorted.

13. Buy quality

Saving doesn’t mean not buying anything at all. When you do buy, go for quality over quantity.
When you have a family, buy a quality couch that would stand the onslaughts of growing
children. Invest in a nice bed, because you’ll spend a third of your life on it. Buy quality because
it actually helps you save money in the long term. It’s the same when buying a car; buy cheap
and you’ll end up spending more on repairs and replacements.

14. Achieve targets and award yourself

Even an occasional dinner at a nice place to mark a milestone in your savings plan can be
helpful. When you do meet your target, buy yourself something you’ve wanted for a while.
Having something that really motivates you helps you stay focused on your goal.
15. Do not borrow money

Avoid spending money that isn’t yours. Avoid borrowing money from your parents, siblings or
friends, although it’s sometimes inevitable. Owing money is not worth buying that thing you
want. As far as possible, stay away from credit card debt, as they charge up to 36 per cent a year.
If you need to borrow at all, then apply for a personal loan, which in general charges much less
than a credit card. Borrowing causes stress, and stress is something you need to avoid.

16. Shop around

Before buying something you need, shop around for a better price, especially for food, clothes,
shoes, cars, and insurance. Just because the supermarket nearest your home is the most
convenient, it doesn’t mean it sells the cheapest goods. Shopping can be extremely therapeutic
and enjoyable, so instead of looking at it like a task, make a day of it.

17. Pin it up

Developing a lifelong habit of saving and investing is not easy. It requires will-power and
determination. Write down your goal and pin it up so you’re constantly reminded of it. Once this
practice locks in and becomes automatic, financial success is virtually guaranteed.

18. Cut down spending on special occasions

Buying presents is great, but don’t overdo it. Gifts that are well thought out are more appreciated
than mindless ones picked on a trip to the mall. Keep your spending down on special occasions –
birthdays, anniversaries and holidays such as Christmas. It’s always the thought that counts.

19. Avoid Credit cards

Credit cards can either be your worst enemy or your best friend. But more often than not, they’re
our worst enemy. They give us a false sense of security and allow us to spend money we don’t
actually have so it’s best to avoid them. Credit cards also have the highest interest rates out of
any borrowing mechanism from a bank. Live within your means and spend only what you have.

20. Pay your credit cards first

If you do have a credit card the least you can do is to pay them off first and ensure you have zero
balance each month. Paying the minimum is a trap as the outstanding balance remains the same.
You’re essentially only paying off the interest to the bank if you do that. If you maintain a zero
balance, you avoid coughing up to 3 per cent ‘finance charges’ per month, ‘credit shield’ and all
other pointless charges. Doing so would allow you to save thousands, each year.
21. Build an emergency fund

An emergency fund is helpful in case of unexpected misfortune – job loss, accident, death in the
family. The rule of thumb here is to have an equivalent of three months of your salary kept aside
as an emergency fund and within easy reach.

22. Don’t buy things on impulse

If you fancy something, wait for 24 hours before buying it. Chances are you will realise you
don’t actually want it. If you love window shopping, ignore shopping malls for a while – or
altogether -- because window shopping often turns into actual shopping. Don’t allow yourself to
be tempted.

23. Save on utilities

Turn off appliances when they are not in use, switch to energy-saving lights and turn off the air
conditioning when you leave the house. Even by placing a water-filled plastic bottle inside an
average-size toilet flush tank to displace extra water will result in hundreds of litres of water
being saved each month. Don’t let the water run when brushing your teeth, use a glass instead.
Avoid taking extended showers or baths. All these add up.

24. Be realistic, even when you get a pay rise

Don’t let a pay rise give you an excuse to upgrade or spike your expenses. Don’t ditch your small
sedan for a Porsche just because a neighbour drives one. Don’t move into a nicer, bigger villa
just because a friend lives in one. You can’t keep up with the Kardashians and come on, let’s be
honest, you really wouldn’t want to.

25. Keep an eye out for discounts

Take advantage of loyalty programmes that allow you to save points. These days most shops
have loyalty cards so sign up with hypermarket loyalty programmes that convert your points into
cash. And, of course, make sure you sign up for a Gulf News Good Living discount card

26. Never bounce a cheque

If you use a cheque to pay rent or school fees, make sure they don’t bounce. Otherwise it will
cost you dearly in charges, or even legal trouble.

27. Get adequate insurance

Make sure you and your loved ones get adequate insurance cover. If a medical condition or
accident takes you away from work and you end up with a huge medical bill, insurance is a boon.
When shopping for insurance, remember that the cheapest isn’t necessarily the best. Read the
fine print. Some costs are necessary for your peace of mind if misfortune strikes.
28. Get a basic TV package

With the amount of TV package options you have in this city, it’s easy to get lost and end up with
a package that is well beyond your budget. People in Dubai work a lot. Most people don’t have
much time to watch telly so it’s a waste to have 500 channels when you mostly watch 5 on a
regular basis. Most basic packages have all you need.

29. Keep your phone bill down

Landline rates are usually cheaper than mobile phone calls, so use your home phone instead. To
save on international calls, use your smart phone’s messenger service to get in touch with friends
and family abroad. Limit your phone calls. Sign up for discounted rates offered by local phone
operators for international calls. Fridays are always a good day to call home in the UAE as
they’re subsidised.

30. Get Wi-Fi instead of a socket connection

Even though a Wi-Fi connection is more expensive than the regular socket connection, in the
long run it will save you more money on your phone bill as you will be using the Wi-Fi to
connect to the web rather than using your phone data.

31. Don’t splash out on rent

If your rent is a quarter of your salary, you’re living beyond your budget. Consider downgrading.
It may be less comfortable, but if you want financial freedom and long-term peace of mind, it is
definitely worth considering this option.

32. Use public transport

More people are using public transport in Dubai now. Use the excellent Dubai Metro and try the
improving public bus transport network. And walk more; it’s good for your health and your
pocket. Only take a cab when it’s absolutely necessary. If you have a guzzler that also requires
high maintenance, it’s time to ditch it.

33. Medicine

Medicine can be expensive. Research home brands of products and shop around at different
pharmacies for lower costs. But get what you need – your health comes first.

34. Wash your own clothes

Avoid using laundry services. It might seem cheaper when compared to your home country but
it’s not really and it all adds up. Set your washing machine at the minimum water usage. When
dry cleaning your clothes, stick to the outfits your washing machine could ruin. A growing
practice in Dubai is to wash your clothes at home and call the neighbourhood pressing service.
Question every expense. Be very careful with every fils, dirham, or penny — especially if you’re
at the beginning of your working life. The longer you hold on a buying decision, the better your
decision will be and the price you will get at that time.

35. Don’t be a victim of Parkinson’s Law

In finance, Parkinson’s Law is: "As the supply of a resource increases, so does the demand for
that same resource." In other words, the more money you earn, the more money you spend; you
go to fancier restaurants, live in a fancier place, buy pricier items, drive a bigger car, and give
larger tips. In the worst case, your expenses even rise higher than your income. If you get a raise,
view it as a greater opportunity to save, not spend.

The key is to set a savings target and stick to it. The degree of your success or failure in meeting
financial goals lies in the ability to stick to your targets.

36. Be frugal

Khalas. Nuff said.