A Return to the 12 Steps – Steps 3 & 4

After all the excitement of my brush with fame in The National, I received loads of emails and comments asking for more details on various aspects of my portfolio and plans. I’m going to post something very shortly addressing the most common queries but it occurred to me that most of the answers will be part of my 12 steps. So the quickest way to keep everybody happy is to crack on and finish them ASAP.

Today we’re looking at steps 3 and 4, which are pretty crucial to your long term financial success.

3. Create accountability by tracking everything that you spend and earn, and your net worth.

I think that this is the single most important step you can take on the road to financial serenity and independence. You may think that you have a pretty good grasp on what you make and spend already… but I’m here to tell you that until you have comprehensively tracked ALL your spending and income across at least 2 to 3 months, you don’t have the full picture. Likewise, until you have tracked your net worth across at least a year… you won’t be able to see your current situation and future trajectory. There is a fascinating book by Charles Duhigg called ‘The Power of Habit’ – I thoroughly recommend it for anyone trying to make changes in their life. In it, the author explains how humans have been conditioned over millennia to be creatures of habit… both good and bad. The simple repetition of certain actions over time turn them from conscious actions to unconscious habits. Spending can be an unconscious habit… it even provides us a momentary thrill to reward us for succumbing to temptation. But, if we can harness our own fondness for forming habits, they can be a powerful force for productivity.

The simple act of tracking what you spend will turn it back into a conscious decision and may make you think twice about unnecessary spending. Meanwhile, modern mobile technology and apps have made it easier than ever to not only track, but categorise and analyse your spending on the go. I use an app called Wally Lite which was absolutely free on the Apple App Store. It allows me to set a recurring monthly income for my salary, then slide the slider to set my savings goal. I currently aim to save 50% of my salary every month and the app adjusts my daily budget as I underspend and overspend against it. By the end of the month I’m usually scrabbling around on about 50 dhs a day or trying to sell things to balance the books.  I’ll post more about this app and other options in the near future but for now… it’s enough to say that it works really well. You can pull up reports to see where you are bleeding most of your money (coffee, takeaways) and where you are doing well (not spending on nights out). One practical tip here is that although I pay our rent quarterly, I split the payment monthly so it better reflects our actual monthly expenditure. You could also do this for school fees etc. if it makes sense to you. Here’s a snapshot of last month broken down by category.


The vast majority of my October spending was on rent, DEWA, Etisalat etc. all bundled under ‘House’. Personal was the next highest category which included family support and anything I spent on myself (not much). If you are disciplined in your tracking and hit your targets (I missed mine in October), you will have a decent sum at the end of every month to pump into your NET WORTH.

Tracking net worth is a bit more of a labour of love than daily expense tracking. One important decision to make straight away, is what currency to track in. This depends a little bit on what currency the majority of your assets and liabilities are in. If you are deeply entrenched in the UAE and all your money is in dirhams… then use dirhams for sure. But if you have a view to return to your home country in the mid-term and intend to hold assets there, it may make more sense to track in that currency. Personally, I use US dollars which is a bit strange for a Brit. Honestly, it’s mostly because my first terrible high-fee savings plans were in dollars and I’m too lazy to change now. I account for this by making a conversion to sterling at the end of every month and tracking that too. Currency fluctuations can make a huge difference to your net worth figure so do try to choose wisely here.

There are a few different definitions of net worth so let’s deal with that first.

Assets – I include every financial instrument I hold that DOES NOT depreciate. So my rental properties are included but my car is not. There is some debate as to whether you should include the equity in your primary residence as an asset or not. I tend to think not… but I’m easy either way. If you are going to include it… make sure you make an honest assessment of the equity that you hold. So the value minus any mortgage debt and other costs. Here is my current list of assets that I treat as line items to help you judge.

  • Equity from a company share scheme.
  • My shares and ETFs on my Saxo Bank offshore trading platform.
  • Peer to peer lending platform balance.
  • A UK Pension
  • My UAE HSBC bank account and saving account balance.
  • My UK current account (where my rental income goes).
  • Property Capital (Rental Properties in UK.
  • Estimate of End of Service Benefit in Current Job (bit of a controversial one but I view it as a pension alternative and estimate it conservatively)


Liabilities – Any debt should be recorded against your assets and subtracted from the total of your assets. If you pay off your credit card debt every month in full, don’t bother recording it here. Just do your monthly reckoning after you’ve paid it down.

So that’s it in a nutshell. I’ve been tracking my net worth religiously since January 2014 when I created the Excel Beast. I have received so many requests to share my spreadsheet for net worth tracking since my interview in The National. But here’s the thing… what works for my investments and the way I like to look at my worth, might not work for you. I’m still going to share it of course… but it might make more sense for each person to build something at a level of complexity and maintenance that suits them.


‘The Beast’ didn’t start out life as a 5 tab, multi-graph, future-predicting monster. I developed and nurtured her over time, as I figured out new ways to look at various investments. The screenshot above shows about a year of data and the bigger picture graphs that track net worth and profit / loss over time. It really helps me to know how far I have come and I find the future projections very motivating to stay on track.

4. Identify Unnecessary Spending and STOP!

At this point, I’m not asking you to fine-tune every aspect of your life (yet). But, there are probably some expenses that you have that you are already embarrassed about. You know the ones… you’ve been meaning to cancel them for months and months but you never get round to it. Are you paying for an OSN or gym subscription that you never use? Do you have a DHS 300 a week coffee habit? Do you eat lunch at a restaurant every single workday? Are you paying off finance on a ridiculous gas-guzzling SUV when you can get by with a far more modest car? When you start tracking your expenses, these are going to stick out like a sore thumb, so do yourself a favour and get rid of them… now… today… have you done it yet?

OK that feels like way too much info for one post… so I am going to stop there and we can all regroup.

Next post: The 12 Steps – Steps 5 & 6


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