Education is one of the most powerful tools when it comes to teaching your kids about money. Little ones as young as seven years old start cultivating spending habits (Cambridge University experts said that), so the earlier you give them the knowledge they need, the better they will succeed at regulating their behaviour later on.
“If little ones witness and develop good financial values and skills from an early age, they’ll be ready for the challenges and life skills of the 21st century,” says Beverly Cook, principal at Al Manahil Private School, Al Ain.
Have you ever looked at your bank statement and wondered whether credit really worked the way you thought it did? You’re not alone. We know that, for many adults, a vicious debt cycle can often be unavoidable due to the pressures of life.
One way to guarantee that kids won’t fall prey to schemes or temptation is to ensure they know how crucial it is to prioritise paying back any money they owe before anything else. It’s information that will come in handy for the future.
“It’s important to be transparent with kids about money from an early age, so they understand its value as they go through life,” says Hamzah Shalchi, regional director of Guardian Wealth Management.
“Recent reports have shown that younger generations are facing a savings deficit, so the more parents can teach kids early on, the better,” he adds.
Additionally, education experts also advise parents to lead by example.
“Kids will try to copy your spending practices until they’re old enough to make informed choices, so show them how to be responsible,” explains Shalchi.
“For instance, my parents always paid cash for big ticket items such as cars rather than getting them on credit. This meant that, now that I’m an adult, I always assess whether I can actually afford something before I purchase it, rather than racking up unnecessary debt.”
Karan Brown, associate director at KBBO Group, Bright Kids Nursery, shares a similar view. “If young kids can be taught the difference between ‘needs’, ‘wants’ and ‘desires’, it will make life so much simpler. Need is what we essentially require to survive, our wants and desires are just the big extras.”
“They need to be taught that, because of our ever-expanding desires, someone and something is lost on planet Earth. We’re wrong if we think it’s only us parents paying for these growing desires. The debt, my dear friend, is actually being paid by our Planet Earth,” she adds.
Instilling a good work ethic into children is also a good idea, and pocket money is a good tool for teaching money management, but this should come from earning it. Give kids one task to complete every week and reward them, not only once it’s done, but if it has been done well. They will soon associate hard work with rewards.
“Save first, spend later. It’s a concept that I’m continually trying to teach adults. If you can communicate this to your kids using their pocket money as an example, it will go such a long way later in life. Encourage them to skip sweets or chocolates in order to save and buy bigger treats later,” says Shalchi, highlghting toys as an example.
Living within one’s means is another life lesson to teach children. For expats in this region, it’s easy to splurge on a luxurious lifestyle, but it’s only a small percentage who can actually afford it.
Little ones need to realise that they may have to sacrifice some things to stay in the red and avoid getting into the black. A little saving early on goes a long way. Learning about money can start with something that’s as simple as numbers, gradually moving on to more complex concepts.
Shalchi adds: “Even if it’s just a couple of hundred dirhams each month, over time, the kids will accumulate some nice little savings in their piggy bank for life.”
Al Manahil Private School, Al Ain (03 767 2030). Bright Kids Nursery, various locations across Abu Dhabi, including Muroor Road (056 687 7977). Guardian Wealth Management, Al Karamah St, Abu Dhabi (04 450 9700).