Dubai: Teaching children the value of money from a very young age is vital for every parent, as this instils and transforms into real life spending behaviours in kids, which stays with them for the rest of their lives. Therefore, when children get exposure to financial education from an early age, it lays a strong foundation for them to have a successful financial future.
UAE residents share the practical methods they adopt to educate their children about money matters from a young age.
Dubai-based Pakistani national Ali Jafri, father of three Abeeha (5), Kabeer (7) and Hassan (10), said, "Children should learn the importance and value of money from when they start to care about their precious toys and other things. As parents, we need to teach them to value the money and be responsible in taking care of their valuable items."
Lesson #1: Making children in charge of their own allowance instils worth of money in them
Jafri has given his children pocket money from the age of 6, and teaches them to save from it to buy their favourite toys from that particular savings.
"My rule is simple: if any of the children waste or lose currency in any said month, he will not get pocket money for the following month," stated Jafri, who works as a sales and marketing professional for a real estate developer.
"I have set their monthly allowance as $100 (Dh367) each, and I explain to them that they need to save 30 per cent of what they get each month and only consider using the remaining amount on their wants, but not all of them follow this advice."
He sits with the kids to plan high priced items they demand. "For instance, my elder one wanted to buy a gaming PC, which approximately costs Dh11,000. So, first, we sat together to decide what specification we are looking for; after that, I asked him to do his research on Amazon and find the best possible deal.
"He spent three days, and within this time, he got me five amazing listings for the particular specifications. I had given him a realistic budget of Dh6,000 in which he had to search for this, although, finally, what we bought was slightly above the said budget.
"Making them in charge of their own money/allowance instils worth of money in them, and in the process, they learn to care for things and then don't mishandle them," he added.
Lesson #2: Having kids learn an essential skill of delaying monetary or material gratification
Research shows that learning to delay gratification is an essential skill in which kids know they cannot get all things instantly in life. Dubai resident Reshma Bhatia, an Indian mother of two kids Paarth and Pari, both 8 years of age, does not want her children to adopt the attitude of taking things for granted.
"When my kids demand a new toy/game, I would encourage them to save for it from their allowance or earn money to fulfil their desire and then buy it from their savings," said Bhatia, a marketing manager in a pharmaceutical company.
She added that this little wait to purchase their desired game teaches them to delay gratification. They learn to plan, wait, and cope with the delay in fulfilling desires and their associated situations, thereby enjoying more excitement on receiving it.
Lesson #3: Have a list of household chores that kids can do to earn some money
She considers making children understand how to budget and spend wisely as an essential life skill. "We have a list of household chores that my kids can do to earn some money from Dh5 to Dh25, such as filling water bottles, cleaning their room, wiping the dishes and arranging, among others. We also give them a monthly allowance of Dh50, allowing them to decide where they want to spend it independently. They save a huge part and invest in something worthwhile."
Bhatia encourages kids to invest their savings in gold or a fixed deposit and shows them how money gets compounded and how investments are made.
"We have a bank account for each, where they can see their savings grow. They give their savings to me to deposit into their account; we have a manual or Microsoft Excel log for accounting for this. They keep the deposit and withdrawal slips as proof (manual receipt book).
"Every Diwali [Indian festival], we also account for how much they have saved and then fund an equal amount from our side. This way, they learn that the more they save, the more they will earn," she said.
Lesson #4: Involve children in age-appropriate financial issues of the house
Dubai resident Roopali Suryavanshee Chauhan, the Indian national mother of Avishi (12), said parents should openly speak to kids about money matters and involve them in age-appropriate financial issues of the house. "Giving kids the sense of being responsible in helping make decisions would go a long way in making them comfortable in making their own decisions."
She started including her daughter in small financial decisions from a young age. "I started to explain to her how to evaluate items versus their cost. It first started with small items such as the cost of candy or a book, and over the years, it has evolved into discussing bigger financial decisions."
"Such as planning for her upcoming birthday party, where now she is learning to understand that she can invite a limited number of guests as usually most kids birthday places charge per child. Plus, she has been involved in overall costing for the party so that she can see the expenses and then decide what part of it she wants to cut down on.
"She comes for grocery shopping with me often, and now she understands how to check the price of each item before putting it in the cart. She can compare two similar items and decide based on the cost which one is more suitable," said Suryavanshee, the co-founder of the digital marketing company.
"I have also taught her that cheap is not always best, and expensive does not mean it's good. So to make smart money decisions, she is learning the cost versus benefit and evaluating based on that. I let her do her clothes shopping where she checks the items and their cost before deciding if it's worth the money."
Lesson #5: Educate them to use bank products and investment tools that can help grow money
Avishi is of an age where her parents teach her to use a credit card when shopping. "The basic rule of using the credit card we have asked her to follow is to check the amount on the bill before presenting the card. Also, ask if she can tap the card, rather than handing it over for a swipe and always take the customer copy from the credit card machine and match the amounts to the invoice."
"Impulsive buys is not a topic that has been introduced formally to her, but I have started to tell her to ask herself this before all spend - be it just a chocolate, a clothing item or bigger products, 'Do I really need this', hence use credit card to make only wise purchases.
"She is also being exposed to the bank work that might be required – such as pay a credit card bill. Teaching her about savings is an ongoing process, but more than savings, her father is starting to expose her to various investment tools that can help grow money."
Money can't be a one-time discussion; it has to be part of the day-in, day-out conversation, said Suryavanshee. "As parents, we have to be patient and give the kids an opportunity to ask questions about money and help them understand money matters at their own pace.
"Every month, my daughter watches me budget expenses for the month. I put money aside for essentials like petrol and non-essentials like evening outs, etc. She knows that I use a pre-paid card for all my shopping to have no chance of overspending in a month. I have also taught her to check and select items she wants and then try to wait and buy them when the sales start to get a good deal."
Lessons #6: Never give them expensive gifts without having them to save some money first
Dubai resident Yoan Joice Beatrix, a mother of 3 girls aged Mea (9), Ana (6), and Aya (5) years, said that children grasp more of whatever taught to them from under the age of 5. "It is the crucial timing for parents because when kids get older, they tend to follow their own mind,” said the Indonesian national, who works as a sales executive at an Art Gallery in Dubai Downtown.
"Since my kids are little and not a masters at counting, I teach them about the currency we are using. I explain to them how 25fils +25fils will become 50fils to my younger children," she added. "I also train Mea to keep aside some money for emergencies that she puts into her little purse in her school bag."
All her children have their own saving kitty, and a communal savings kitty that they share and a little purse of their own. "We have given them each a different kitty and teach them to save some money that sometimes they get from relatives or my husband and me. They sometimes gather their money together in a communal saving kitty if they want something, which requires more money.
"At the moment, they are saving together to buy Nintendo Switch that costs around Dh1,200, but they have not collected enough money. So we as parents will add some money to give it to them as a present on Christmas. Last year they were saving for a big dollhouse, which finally they got also on Christmas, which was around Dh400.
"We never give them expensive toys without having them save some money first, and of course, my husband and I will pitch in the end. However, we want to teach them to be mindful of things they want and learn that it is always important to keep some money aside to fulfil their desires," Beatrix added.
"I always explain to my children that to get money, people need to work. That is why I sometimes give them a small task to earn money, which they will save in their piggy bank and from time to time, they will use it to buy things they like,” she added.
"Money they can earn is Dh10 for each task they do at home like helping me in washing dishes, putting clothes in the washing machine, hanging and folding laundry, fixing the bed (pillows, folding blanket) etc. Mea can also help me in preparing warm milk and vacuuming, etc., to earn money," she added.