Pakistan Under Siege on Rising Costs

Working through your debt structure requires careful analysis and streamlining your debts and finances becomes a key part of midlife, as you steer through short term gains and long term plans. In Pakistan , one out of twenty men and one out of twelve working women are looking at re-management , retaking their personal financing to enhance their ability to earn more. Now we can say that we on the defensive or that the economic uncertainty drives it , or maybe work pressure . But the fact is that with age, you tend to be generally more careful and better at planning , due to life s endless experience at work and managing your business. It is not job insecurity, or country politics or even the desire to go impulse buying. Its predominantly the need to get better at what you do and money becomes a strong motivator to either get better at saving or get more efficient at spending, as you economize as a family , in later parts of your life.
Few considerations come with age, as we understand how the world works better. Whether you are averaging a hundred thousand dollars a year average or less than fifty, you keep working at it , multiplying income and savings. In a developing country, most of what you save is spent on the “ acquired lifestyle “ , which is costly. Then there are other peer pressures to be able to fit into the “ circle “ – the breed that is fashionably correct. And the costs, child cost, travel costs, savings, maintenance , health and security costs, like the safest car, the nicest locality , servant costs and entertainment costs that we feel need to remain constant , consistent and payable.
It’s the world of the tech-savvy. Information is critical and current , valid and vital to your needs for speed communication, staying ahead in terms of sense , logic , money and power. We are all control freaks , one way or the other . We thrive on being the ones in power, like human nature to eat well, drink at will, drive at leisure and sleep to the maximum. With age , we start to take these things for granted. But what if these things are not for granted? What if the cost of living is high ? Almost unbearable.
Let us take an example of the average educated family in Pakistan. We are on average four to five people per house or apartment , where almost two thirds do not work and depend on the rest who actually earn for a living. In a culture where family takes care of their own, it is by demand that we exert more pressure involuntarily on ourselves just to be able to take care of our immediate family, parents, siblings and children. The inherent pressure to ensure “ all is well “ is the hidden cost of living to begin with that no one really evaluates to the fullest, until its starts to be appear visible by the hour by itself. And that is the breaking point for the bread-earner , nowadays termed as the midlife crisis . On an average , cost of education for one child today in rupee terms is on average fifteen thousand rupees a month , give or take a few. This includes cost of books, uniform , lunch , tuition costs ( these days ) and transportation or fuel cost whether your own or rented vehicle ( school bus ). Then you got water and maintenance cost of living, inclusive of water charges per apartment / house that ranges anywhere between eight thousand to twenty five thousand per month , along with maintenance cost of imported water through tankers to about five thousand more approximately all over the big cities. An average cost of taking your family out for a dinner these days is anywhere between three to five thousand for an average family of four. Kids eat more , so one can add another three thousand per month as extra food cost outside the home. While indoors, average food will cost you around five hundred a month that is around ninety thousand a month. On the whole , the family has to spend around over a hundred thousand a month and this does not include car or bike fuel where you have to ensure another fifty thousand a month by car, and half that by bike.
How to cope up with this cost while ensuring you save your income that is generated every month from a job. Simple ways are there to be followed strictly and it can be a lot easier for the average social animal out there. There are ways to bring in extra income that we need to look at today in order to cope up with finances. First , the idea to start making yourself home productive by putting a portion of your owned house on rental which can fetch you an easy twenty five thousand every three months on an average apartment and can fetch you a sixty to a hundred thousand per house , depending on the size and condition of your house that you own. So “ Use your house “ – either find A tenant quickly or put it up for rent through the letting agency or property dealer. A golden rule in Pakistan actually benefits the owner as a ten percent minimum rental increase is a mandatory requirement for the tenant to pay to the owner , that too along with the advance rent for the year , which is immediate extra income coming in as pure savings. Another way to enhance your savings is to “ Use your debts “ – restructure them wisely . check your credit card interest payments , your car insurance you pay every year or your house mortgage – the rate at which you pay may be costing you a lot more than you are willing to pay. Reduce that cost and readjust the rates through your bank and settle for a cheaper mortgage or insurance policy. Most of us are too lazy to look into these matters , as we do not look for best value for money. Then you need to look at daily spending habits that consume your savings , like eating out daily, buying extra DVDs , ordering food in house, not collecting fuel receipts to know how much you are wasting driving your car unnecessarily , kids toys you spent on thinking they don’t cost at all, endless trips to the salon, buying on impulse, using credit cards instead of cash to buy groceries , something that really adds up your monthly cost . Finally , you need to “moth ball your other commitments “ – saving up for one holiday a year instead of two, cost sharing the holiday between two adults , not making two many cell phone calls , getting a better cellular package. Most of us ignore little things that add to the cost of living comfortably.
Another thing to look at is the concept of “ living within your means “. These days the richer segment of society also pays tax as incomes rise , so does the tax brackets while the middle class segment earns and spends trying to match up to the rich without realizing that they have their means and have to operate within those means for better or for worse. While we a re-living within our means , we simply forget to be disciplined which is the exact and only thing to do consistently. Working out a budget is the easy thing to do as you calculate your monthly income versus spending, food, accommodation, car fuel, bills etc. One excellent way of helping yourself while you are out buying is to simply walk out of the shop or outlet. It works. Same thing when you are on a career break and while you are sun bathing on the beach , think how much you might have to spent if you got up to go the market. Hence you stay by the beach and save yourself another fifty dollars while travelling. One needs to avoid two things here : one is “ Carry on as usual “ – a big mistake as you end up more debts , less savings, more frustration and stress and less control over your financial life. Another mistake not to make is “ not making contingency plans “ . Plan for unexpected events that have not occurred but what if they do take place , like illness, job changes, recession, transfer, parent care, hospitalization etc. Someone has to pay for them all of a sudden as they do not just happen to you pre-informed.
Pakistan is under siege with the rising consumer costs, where we now need to rectify spending ,where we see it happening. Real savings are negligible, taking us by the root as every day is getting harder to earn hard dollars and put up savings , while taxes rise all over and so does downsizing. Plus, another cost that is rising fast is the “ nepotism cost “ – the cost you have to pay due to someone else coming in and talking away your benefits. It happens a lot these days in an unfair work system , such as the one we have in Pakistan. Getting out of the status quo and out of classist system wont be easy except through personal savings and improved finances. Planning ahead for contingencies for is imminent. Text book rules do not apply anymore. Re- invest in yourself and your habits or face the tightrope.

The author writes on IR & Public Policy – is a banker and media broadcaster