Counting life's comparative costs

I was hit by a wave of homesickness last week, and the trigger wasn't the holiday season or a long distance phone call. It was an antiseptic cream I bought at a nearby pharmacy.

The cream I used to buy in Egypt for some Dh2-Dh3 is sold here for Dh31.50. Hesitation lasted for only a moment before I remembered the cut on my leg and paid for it while gritting my teeth.

Missing the distorted subsidy scheme which my country is now trying to eliminate? Not really. But to be fair it provided middle-class people like me with a predictable and cheap living, which doesn't seem like an option in the UAE.

Even though the more functioning system here isn't completely free, as we see occasional government intervention in curbing price hikes, you still feel subject to market powers. Unless you're working for one of those employers, if any, who keep pace with inflation, you may need to work harder on your budget to ensure not only that your covering your bills but you're still able to put some money aside.

From a few dirhams on grocery shopping to a few thousand on your rent, your once-reasonable salary may seem to be diminishing. So when you come to a budget review, try not only to look at your income and spending but also to your saving expectations. Warning: it may contain a lot of compromises.

First of all, try to get the bills out of the way: rent, healthcare, education, transportation, etc. Try to forecast inflation: it doesn't matter how much eggs, bread and gas cost today, the point is how much they will cost in the year to come.

This may not be a fun exercise, but what I realised is that it becomes less straining if I don't compare price trends and cost of living with those in other countries.

Education

Take education for example, where a school year for a four-year-old costs approximately Dh35,000 to Dh40,000. How much will schools charge in 2008?

This is a question that will require anyone coming from a free-education background to have a more flexible understanding of education as a commodity that is subject to supply and demand.

It's also a business that needs to be profitable and needs to keep its costs under control in order to provide the same quality.

So the whole equation is different. You and I may be enjoying a tax-free living, but it may be asking for too much to receive free services as well.

Like other big cities in the world, the UAE strives to offer high standards and world-class services but it all comes at a price. Shortages don't play in our favour either as is the case with accommodation where families are forced to downsize to keep their rent under control.

So the trick may be to set your own financial limits and many realistic expectations. If a drive down Shaikh Zayed Road shows you that you're living side by side with owners of million-dirham plus cars, don't feel deprived for not sending your children to the best schools in town.

From a few dirhams on grocery shopping to a few thousands on your rent, your once-reasonable salary may seem to be diminishing.