Most people think that financial literacy has to do with math and formulas and is nothing that young children would easily grasp – but that’s a popular misconception. Financial literacy may have to do with countings, yes, but most of all it is the competence of managing one’s finances.This includes psychological, empirical and educational aspects, and it’s rather a code of conduct or behaviour rather than the capability of keeping a household book.
Thus, in the same way savvy parents would teach their children good manners and how to stay safe, dress properly and be culturally adept, why wouldn’t they teach their kids how to smartly and responsibly handle money – since money is ubiquitous and of such strategic importance for one’s life course that the mechanisms of dealing with it can’t be talked about early enough. However, very few – if any – elementary schools and even high schools rarely attend to that matter and offer personal finance classes.
Here is where the Kids Finance Initiative steps in. As the first of its kind in the UAE, it offers programmes on personal finances for primary students aged nine to 11, as well as a secondary course for those aged 12 to 16. The lessons start with basics on budgeting and investing, how to realistically set and reach financial goals, how to give back and, equally important, how to handle credit cards and debt. Later on, the course delves into managing savings, personal budgeting, investing and managing debts, as well as entrepreneurship and charity.
Marilyn Pinto, founder and managing director of Kids Finance Initiative and mother of two, found the absence of financial education both in primary schools and at home critical, particularly since the global financial crisis showed that it was partly owing to a lack of individual knowledge of the consequences of wrong financial decisions.
“More than ever, being financially astute is a critical life skill and, sadly, one that simply isn’t taught; the next generation is being launched into adulthood with little or no knowledge of how to manage their money,” Marilyn says.
The target of her social enterprise, which cooperates with currently seven schools (Arabic & English) in the UAE and clubs like the Sharah Girl Guides, is to enable parents to give their sons and daughters the opportunity of discovering how money should be managed and how they can achieve financial independence and stability in order to secure a financial future, making life as such more enjoyable and less sorrowful.
Why this programme is important shows the fact that many parents turn a blind spot on money management skills because a lot of them feel financially inept themselves – because they are in debt on their own or do not save enough – and would rather leave it to education experts. It is also to avoid that kids, in turn, gradually learn about money from other sources, for example from class mates, friends and peers or from social media, TV and movies, from where they probably would get the wrong message about the relationships between earning, spending and saving and the conception of rich and poor.
Again, at the Kids Finance Initiative they aren’t sitting down for accounting class. The concept is totally different and involves the training of money aspects in a simple, easy-to-understand and retainable way by using modern teaching methods including group activities, games and role play.
Younger children should understand the basic ideas of finance, namely that cash isn’t just paper that flows out of an ATM but has a value and when it’s spent, it’s gone. It’s also better to educate them to use cash rather than debit or credit cards because the latter would probably make them believe such a card provides an endless supply of money and cut get them anything they want, while cash is very real and its value limited by the number of bank notes and coins.
Another important point for kids to understand is of psychological nature. It is the art of balancing between the emotion of wanting to possess something – triggered by advertisements or peer groups, for example – and the awareness whether a purchase is reasonable in one’s individual financial context, in other words, the difference between wants and needs. This can’t really be taught early enough.
By Arno Maierbrugger