Dirty Dinar

Three days ago I had KWD 68.500 in cash. Today I opened my purse to find 54 in cash remaining. Where did the 14.500 go?

• Parking - 1.000
• Gas - 5.000
• Lunch at Work - 5.500
• Dinner Out - 3.000

Parking
This is an expense that I can’t do anything about. Tomorrow is a day off so I will be saving 0.500 on parking then.

Gas
Again, this is an expense that I can’t do anything about. The price of gas is what it is and I needed a full tank to get me through this week and the next.

Lunch at Work
Of the KWD 5, only 2.300 was the cost of my food. I realize that I have to stop treating my coworker to lunch until I have better control over my finances.

Dinner Out
My dinner cost KWD 2.750 but I included a 0.250 tip. My average dinner out is around the KWD 7 mark, so spending 3 was actually a bargain for me. It helped that we were at a cafe and that I only had a salad.

Goals

Over the weekend I plan on spending time at home with family and I have been invited to my friend’s house for lunch. That will somewhat curb my expenses. However, I have a birthday that I will need to chip in to buy a birthday cake for and present so my good intentions may come to nothing.

I’ve been reading a lot of personal finance blogs and saw that many people mention their salary in terms of annual earnings. For example, “I make 40K+”. I’ve never heard that said here in Kuwait.

Companies pay a weekly or monthly salary. I haven’t come across any employer that pays an hourly rate. Employers pay a base fee and sometimes you’re entitled to government allowance or various company allowances (housing, relationship, car, etc.). Not all companies have a bonus scheme and I have never heard of anyone getting a signing bonus. When people ask how much you make they mean per month instead of your annual earnings.

I was curious how I ranked compared to the salaries in the United States so I tried to work out how much I make in US dollars. To calculate my earnings I took today’s currency rate of 1 KWD = 3.663004 USD.

My monthly salary of KWD 923.117 over twelve months comes to KWD 11,076. When I converted that amount to dollars I found out that I make $40,575.

However, I get a government supplement (KWD 240) in addition to my salary each month which bumps my total up to KWD 13,956 annually.

That pushes my total earnings to $51,126. The difference is $10,550! That’s not a bad chunk of change.

Kuwait doesn’t tax individuals (yet!) and the company I work at does not pay out bonuses so that $51,126 is the full amount I get to take home.

Now some problems with my example is that I don’t get taxed and I live under my parent’s roof. That skews my comparison to those living in the United States. I have more disposable income. That’s a good thing but doesn’t make for a tidy comparison.

Of course it doesn’t help my case that I’ve continuously lived beyond my means. I have no idea if I’m making what I should be making in my job position with my experience. I will have to continue my research into that.

Kuwait Times ran an unusually high number of articles today dealing with employment, salary hikes and labor laws in Kuwait. Or maybe I’m just more aware of them now that I’m looking into saving and investing.

Below is the article in full.

KUWAIT: A gulf of differences seperates the rights of those working the public vs private sectors in Kuwait. Issued in 1964, the labor law for the private sector requires longer hours for employees who in return receive fewer benefits.

For example, government receive about three times longer paid annual leaves and they work fewer hours and only five days a week. Private sector employees typically work six days a week, at least eight hours a day and have shorter paid holidays. Also regarding the salary increase and employees’ chances to get promoted to higher positions, these rights differ.Plans to revise the private sector labor law, however, have been halted. The Health, Social and Labor Parliament Committee announced last week that it had almost finished reviewing the draft amendments to the private sector labor law. The committee is still reviewing the two last sections of the draft which consists of 146 articles. Once the committee completes its review, the draft will be submitted to the Assembly for approval.

This draft was suggested by the Private Sector Employees Committee, the Kuwait Chamber of Commerce and Industry and some MPs. Representatives of the Ministry of Social Affairs and Labor and representatives from the Manpower and Government Restructuring Program also attended the committee meeting in order to approve suggested amendments.

The draft law, if approved, would bring positive changes for employees in the private sector. According to the committee, this law should increase the period of annual leaves and it should also set the rules for other matters such as working hours, overtime, and many other issues.

The opinions of the employees of the private sector were similar to the committee and they said the law will bring satisfaction and comfort in working in the private sector for both Kuwaitis and expats.

I think it’s a great suggestion which shows appreciation for laborers. It’s an improvement in the legal system of Kuwait and it will positively affect private employees and encourage them to work harder,” noted Ra’fat, a 31-year-old expat employee.

The new law will give advantages to employees who don’t get holidays. “The best advantage of this law is that expat employees can travel for longer holidays, like a month, without any worries. Most expat employees visit their families aboard and they want to spend more time with them,” Fatma, a 24-year-old expat employee, told the Kuwait times.

For Kuwaitis working in the private sector, this law amendment won’t make much of a difference. “The allowances we get are the same as our colleagues in the public sector. It’s true that I work for longer periods than people in the government, but my salary is much higher. Also, I get commission and bonuses unlike in the private sector. I also have a 30-day paid leave every year in my contract,” pointed out Moath, a 30-year-old Kuwaiti working in a private real estate company.

The rights given to private employees differ from one company to another. “I work six days a week, and this makes me jealous of my friends in the public sector. On the other hand, my salary is much higher so I think it’s alright if I work more. I think the new law will bring us more advantages and it will satisfy everyone,” said Mohammed, a 26-year-old Kuwaiti working in the private sector.

Business owners have different views on labor law amendments as there are those who will sustain losses due to these new amendment.

This law will definitely affect me negatively as my laborers will work 11 months instead of 11 and a half months. Furthermore, if my employee holds a key position and I really depend on him, it will negatively affect my work if he leaves for 30 days. I’m flexible with my employees to extend their vacation if it is needed, but if the new labor law states that I will be obliged to give them a 30-day paid leave, I won’t agree to giving them any extra leaves,” argued Salah, a 35-year-old car garage owner.

Published Date: January 07, 2008
By Nawara Fattahova, Staff Writer

Here is another article from Kuwait Times, this one dealing with the number of Kuwaitis waiting to be employed by the government.

Every year unemployed people register to be placed in public sector jobs. If a person has not found a place after a period of six months from the registration date the government will pay out a monthly stipend until employment. Because of the high demand for government jobs, the Civil Service Commission encourages nationals to go into the private sector. However the longer vacation days and shorter work days are favored by many in their decision to apply for a public sector placement.

KUWAIT: The Chairman of the Civil Service Commission, Abdul Aziz Al-Zaben recently announced that Kuwaiti citizens registered on waiting lists for government employment totaled 20,225. He said that great efforts were being exerted to reduce the waiting time and expedite employment procedures.

He added that CSC’s main task was to provide job opportunities for Kuwaitis in both the government and private sectors in coordination with the manpower and the government restructuring program. He noted that the CSC worked hard on restructuring manpower in an attempt to combat unemployment among citizens as well as decrease demand on government jobs.

We do our best to encourage national labor to work for the private sector,” he said. He pointed out that such an aim could only be achieved through holding special training programs to qualify citizens to work in certain professions. He said that other activities would include surveying the labor market through coordination with the manpower and government restructuring program.

He added that the CSC also cooperates with various government establishments and sends reports directly to the Cabinet every six months if any violations were detected in any of the offices. When asked to name a government sector employing the largest number of Kuwaiti employees, he said it was the Ministry of Education.

Published Date: January 07, 2008

Kuwait looks to be following in the path the United Arab Emirates set last November. In November 2007 the UAE announced that they will be increasing government salaries by 70%. Of course, they have inflation to compete with.

In Kuwait, people always want more money or their loans dropped. Time will tell how much of an increase public sector employees will receive. I’m more interested in the last sentence of the article.

KUWAIT: Minister of Finance Mustafa Al-Shamali said the government is focusing on the issue of increasing the salaries of all government employees before the end of February 2008. Al-Shamali said the Word Bank has prepared a study about the salary raise issue and the study will soon be sent to the Civil Service Commission (CSC). The study will have information such as the average income of government employees in various sectors and departments, the size of price increases and inflation rates, the financial amounts needed to be able to cover these increases, and other types of important information related to this issue.

Al-Shamali said after the report has been reviewed by the CSC, it will then be submitted to the Cabinet so it can be approved. He expects that the salary raises will be issued on or before Kuwait’s celebration of independence and liberation day, which is at the end of February.

Al-Shamali did not give any details about how much the increase would be and did not say whether the salary raises would be one fixed amount or would vary depending on government positions or departments. He said it is not possible to specify a certain amount with the World Bank’s report. “But God willing, the salary raise will cover everyone and will satisfy everyone as well,” he added.

Meanwhile, the Minister of Interior Sheikh Jaber Al-Khaled said the government is concentrating on this issue and the employees of the Ministry of Interior, whether soldiers, officers, or civilian employees, will have their salaries reviewed.

The minister promised that a full study about the salaries of Interior Ministry employees would be prepared and he noted that the employees from this ministry deserve the salary increase.

In another development, the Ministry of Social Affairs and Labor’s committee for expatriate work affairs said they have achieved many feats in a short span of time.

One achievement of the committee was a preparation of a study about minimum wages in Kuwait and a study about issuing commercial licenses in accordance to local labor market needs. The committee said they also aim to further develop the private labor sector.

Published Date: January 07, 2008

A good emergency fund can tide you over in times of unemployment for a period of 3 to 6 months. With my base salary of KWD 1000 per month I would need to maintain an emergency fund of KWD 3,000 to 6,000.

Typical advice from financial planners tell you to save at least 10% of your salary. Because I get a government supplement that’s over 20% of my salary I can afford to save a higher amount of money. With an income of 1163 my goal is to save quickly and that’s why I want to save up to 50% of my salary each month until June to have KWD 3,000 in my emergency fund.

My first priority is learning to control my spending habits by establishing a budget. I have KWD 172.149 in my current account. I also have KWD 68.500 in cash and a jarful of loose change. That gives me a total of KWD 240.649 to see me through until the end of the month without having to resort to using my credit card.

After writing up what a typical week is like for me I have determined what expenses I have during the week and what I can trim them down to and still maintain a social lifestyle.

My weekly expenditures are:

• Daily Parking 2.500
• Phone Bill 20 (My average monthly bill ranges from KWD 80-100)
• Lunch at Work 20
• Dinner Out 30
• Salon 20
• Gasoline 5

That brings my total to 97.500. I have not included shopping or miscellaneous expenses such as birthdays, travel, and random trips to the grocery store. I can tighten the hold on my expenses by withdrawing 100 in cash at the beginning of every week and recording every purchase I make. That would still leave me with 163 for emergencies.

Going through my weekly expenditures was an embarrassing exercise to go through, especially because I tried to lower my expenses to the bare minimum that I could survive comfortably on and that was 97.500. I’m going to be budgeting myself to 663 and that is still more than some families make in a month! They manage to pay rent, feed and clothe their children and save yet I have been incapable of saving anything for the past four years. It’s a shameful thing to admit. I really believe Kuwait needs to implement mandatory personal finance courses. Many people are in debt because there is a lack of awareness on how to control your finances.

My emergency fund is the first savings strategy I want to pursue. Kuwait may be sunny most of the year but you never know when that rainy day will come along. Once I reach my minimum goal for my emergency fund I want to continue placing 10% of my salary into it on a monthly basis until it reaches KWD 6,000. The other 40% of my savings will go into another savings account for investing. I have no idea what interest rates there are for savings accounts so I will have to start shopping around for a bank that gives a good rate.

I have KWD 172.149 in my current account.

That is all the money I have in my name.

I live in my parents house.

My car is in my father’s name.

I have no savings or investments.

I am 28 years old.

In 2007 I paid off my credit card debt and car installments. I loaned a friend KWD 1000 that I have yet to get back. Until I have the money in my hands I can’t count it as part of my net worth. It’s still a pitiful amount for a 28-year-old woman who has had a regular job for four years! At least, I’m starting 2008 debt-free.

I need to start planning for a future. I want a financial cushion that I can depend on instead of counting on my parents to help me out in emergencies. For the past four years I have been living from paycheck-to-paycheck, occasionally living outside my means and racking up credit card debt.

In 2008 I want to:

 

Save money

Invest in the Kuwait Stock Exchange

All the finance websites I have been reading recently suggest having 3-6 months worth of your salary in an emergency fund. I work in a medium-sized company and make KWD 1000 with the government supplement of 240. My workplace automatically deducts a small amount (76.883) that is placed in social insurance. I can collect that amount when I retire. That means I make a total of 1163.117 each month and I don’t have a fils saved up.

My emergency fund should have KWD 3000-6000. My first goal is to save half of my salary for the next six months until I reach my target. Then I can concentrate on my second financial goal for the year.

Now I have to go see how much money I have in my purse. With some discipline I can make it on KWD 172.149 until the end of the month when my salary is deposited into my account.