can't find where to add local var... only global

I feel like a big doof... But I really cannot find how to create a local variable. I have right clicked just about everywhere, within my event I want to add it to, outside of it, in between.. but all I get is the option to add a global variable (plus group, comment, sub event, action, condition.. but no local var :( )

What am I doing wrong?

Select a sub-event and press 'v'. Or right-click a sub-event and select Add -> Add local variable.