managing domestic costs and children – the iPhone and pocket money deduction method


OUR CHILDREN are not infants any more.

They therefore have a much closer association today with the real world than they did ten years ago, which has a direct impact on the personal finances of their parents.

But their parents operate on a tight domestic budget, what with mortgages and school fees and groceries and whatnot.

So, thinking like all sensible people out there, we spent the first part of their childhood keeping them distracted by easily affordable childish things. But now that they won’t be distracted by ice cream and screechy toys, we have to keep devising means of lowering the operational costs of having children.

Taking a leaf from years of observing companies and the way they do things, we started picking off one item after another to cut down on, while motivating the children to perform well, to provide us with shareholder value.

First, we got the kids to learn the value of money to each of them personally – the way employees do when they start buying things like nice dinners, furniture and then maybe even cars and houses.

At some point they – the children – started earning pocket money allowances for good deeds or behaviour including attending school. That school attendance allowance was really free money because they honestly had no other choice and were eager to go anyway; but if they ever got tempted to lie in because of heavy morning rains, for instance, we didn’t have to remind them about their account balances.

Plus, our system was so clear that even if a child got admitted to hospital they had no such thing as as sympathy allowance – but they didn’t get a school attendance allowance either.

But they don’t receive cash daily. Instead, they are required to maintain a pocket money allowance record in a book against which we both sign and update almost weekly.

So every weekend, if the children wanted to spend money on treats like snacks, trinkets, toys and fast food, it came out of their own personal money. If ever they find a need to spend any money, they have to whip out their records and make a withdrawal from the parents.

That’s a lesson we learnt early on in our own lives, and when we departed from it as young adults and kept cash on our persons we suffered for it shortly into the month – mostly on Mondays.

This arrangement for the children, with time, became precarious for us: one day the eldest walked up with a large sheet of paper on which she had written mathematical workings to back her case for me to place an order for an iPhone she had seen online.

I audited her records and she passed the audit.

I didn’t have all that money handy and used only one delaying tactic – she hadn’t factored in the shipping costs. She went back and returned with a notification of how many school days she was going to attend in order to reach the desired amount.

We’ve never looked back.

Sometimes they’ll do extra bits of work that doesn’t involve domestic chores but to earn extra money so they can hit personal targets that require said money.

And then there are the penalties. If any of them misbehaved they got fined on the spot, losing some of their allowances. And, again taking a leaf from some companies observed, some domestic fixes have been tied to these allowances.

A couple of weeks ago I was pleased to hear them having a major argument over who had left the lights on in one room.

See, to cut down on electricity costs I used to run patrols around the house switching lights off while shouting about it. Somehow they’d get switched back on again.

So I started a Ushs500 deduction for every time I find a room empty but with lights on – Ushs500 off each of their allowances for the day, to create some group responsibility.

That worked perfectly. Where before they stampede off to school leaving every lightbulb burning, today the house is in quiet darkness as they go.

Most sensible companies do this.

You earn a monthly salary for doing your job. Sometimes even when you don’t do your job you still earn your monthly salary – just like the kids going to school and getting their daily allowance for just showing up.

When your eyes are set on a target you work even harder, if you’re sensible, and avoid getting into any shenanigans that could lose you any earnings.

Some companies will even arrange for furniture and electronics suppliers to come to the offices to make a pitch so you work harder to earn the money required. Like the internet does to make the iPhone so attractive to the children that they stay on their best behaviour all through.

And companies offer incentives based on targets that also include cost-cutting initiatives and adherence to budgets and plans – just like my energy saving one at home.

Next…? Perhaps it’s time to move the incentives upwards to mid-management level. Don’t tell them till we’ve finalised the strategy, but the domestic staff are getting in on this soon.

this year, let’s get the youngsters to save (for) Uganda

this year, let’s get the youngsters to save (for) Uganda

AT some point in December I was gallivanting round my neighbourhood and spotted a pile of curious-looking little boxes in a carpentry workshop.

My first thought was that they were some type of ‘Piggy Bank’ savings box made in a rudimentary but apparently effective manner for the use of little children. I had no clue what gave cause to that being the first option to come to mind, as I had been feeling irritated for months by the specific direction commercial bank advertising here takes.

I have watched this for years, and like any other ordinary Ugandan lacking in astute personal finance skills, have fallen prey. See, we don’t encourage saving money as much as we do spending it in this country.

As late as November 2017 I was catching radio adverts with high tone melodious backdrops to hyper lively voices enticing people to apply for loans to “win” stuff like “free TVs and airtime”.

The concept has always angered me especially because we appear to have a large population of people who are gainfully employed to levels that enable them to sign up for these loans, and yet not insufficiently intelligent to avoid the debt trap.

I have imagined many a time before that commercial banks would be better served by encouraging people to save more money and get them to take loans for things that will enable them to earn the money they need to pay back with interest. But I am no banker and certainly not an economist of the lofty levels that cause banks to make huge profits, so I probably can’t advise them properly.

If life were fair, though, the authority that supervises public advertising – like the Uganda Advertising Authority (it doesn’t exist – we have the private-sector Uganda Advertising Association instead) would monitor and veto all advertising that hoodwinks people in any small measure.

If life were fair there would certainly be no hope for a campaign that gets people to participate in a lottery while becoming indentured for a major portion of their productive future.

This stuff went through my mind swiftly as I walked over to the carpenters with the little boxes to establish what they were for – and I was blown away by the declaration that they were “Savings Boxes”!

The carpenters were surprised at my demand that they explain their motivation for making those particular items. The plain little boxes, made of the cheapest wood possible and clearly put together from off-cuts, cost just Ushs2,000 each.

I bought the entire lot and have gone back thrice since in four weeks.

My mission? To distribute as many of the boxes as possible to all nieces and nephews I come across in the next few weeks, along with a quick tutorial in saving money and a pledge from them that they would spend 2018 filling their allotted boxes with savings. They also get to colour and decorate their boxes so that they are personalised and fun to own.

Their parents are conscripts, and will find themselves having to provide pocket money and other revenue in exchange for work done by the children while avoiding child labour breaches. Weekend outings will not involve money being spent on fast food and sweets, but put into the hands of the children with reminders that they should keep some for insertion into the savings boxes.

My experiences with this approach have been so successful that I don’t directly suffer expenses such as mobile phone and airtime purchases. The children have allowances of their own that they bank daily using a journal system.

It is satisfying to see it in action – as first happened when one rolled out a ledger and ordered for an iPhone online – but also inconvenient when they rack up high numbers and come collecting together!

Nevertheless, while I keep lowering the radio volume when commercial bank adverts start encouraging people to take loans to spend on consumables, I will also be pushing this savings box initiative so these little ones are less likely to enter into the debt traps that many of our lives have become.

The next step in my plan will involve teaching them about interest on savings. By coincidence this week, one of my colleagues at work, Conrad Van Niekerk (a charming fellow of South African origin but Ugandan spirit) told us of the practical lessons his mother – a banker – taught him.

Once, when he had just left home and was setting himself up, he borrowed 600 Rand from her to buy a television, and saved up over a few months to pay her back. When he hit the mark he walked into her bank office proudly and handed her the money in full, beaming with pride at how impressed she would be.

She took it, gave him a warm motherly smile, and then replaced it with the seriousness of a banker, “That should be 623 Rand and twelve cents – but you can keep the 12 cents!”

He paid the interest.

My children have no idea how soon that story is coming their way…but with THEM earning the interest from their savings, rather than having to pay it when they borrow money.