Prudent planning for a family affair

Nima Abu Wardeh has doubled the number of dependents in her family, and adds up the potential financial cost.

Illustration by Gary Clement for The National

Last Wednesday morning, my family consisted of me and my son. By bedtime it was me and two sons. We are delighted that our family has grown - sizeably - with the addition of a wonderful six-year-old to the fold.
Truth be told, if I had spent time concerned about what could happen, how things could go wrong, how much the process would cost me, and the financial hole that would be made by doubling my number of dependents overnight, I probably wouldn't have gone through with it.
The unknown can be terrifying. But it need not immobilise us.
It's been interesting observing people's reactions around the issue of adoption - especially adopting an older child.
"That's big. That's big." said a strapping leading lawyer over and over again. He's normally quite the wordsmith - he has to be in his line of work - but that's all he could muster. Every person who knows about the adoption refers to the cost of bringing up another child - with a lot of trepidation.
A child is most certainly for life, and we can easily realise how their presence can rob us of things like alone time, that ski holiday you've been dreaming of in a five-star catered chalet, as well as the daily cost of school, clothes, food - the list goes on - it all adds up to an estimated Dh1 million to Dh2m over the first 18 years of a child's life here in the UAE, depending on how you live and decide to educate them, which is why children brought up here have been referred to as million-dirham babies.
It's easy to see, and fear, the financial consequence of providing for a child. But it's not just obvious things like this that have financial consequences. Every decision we make includes a financial element, the impact of which is felt throughout our lives.
So what we need to do is figure out what is more important to us, to the whole of our life, and spend (or not) accordingly.
I'm going to show you how daily spending on things like lunch and coffee amounts to what each child will cost you over the first 18 years of their life.
Here's the maths: let's keep things simple and assume an average daily spend of Dh100 every day. Your spend could be more or less than this. Let's assume this amount is being spent each day of the week - you probably spend this much - or more - if you average out your daily spend during the week, and your treats over the weekend. Over 18 years this amounts to Dh656,900.
Now assume that Dh100 a day was compounded at 5 per cent a month over 18 years. You'd have a healthy sum of Dh1,089,069.29 sitting there when your child turns 18. That money pretty much covers all of, or a big chunk of, what you spent on your child up until then. You can find many compound interest calculators online to help you see what a little put aside regularly can become over the years.
I used this one: www.financialmentor.com/calculator/compound-interest-calculator.
Why don't you put in what you think you can put aside a day and see what it would become over the course of your child's lifetime until they reach the age of majority, or whatever other benchmark you choose?
Of course your commitment to your child doesn't end at 18. The point of this simple exercise is to show that it's the things that we don't tend to "see" or "feel" that cost us a lot more than other things that can seem to be biggest financial drain.
So now that you can see the numbers talk, which would you prefer? A lifetime of enriching your local deli and cafe, or sharing the joy of life empowering little people - be they birth children or not - to have big lives?
Children or no children, the point is that what you do every day with your money counts. Forever.
Nima Abu Wardeh is the founder of the personal finance website cashy.me. You can reach her at [e-mail] and find her on Twitter at @nimaabuwardeh