Challenge for us all is to develop a culture of saving

Felicity Glover talks to Clare Woodcraft, the chief executive of the Emirates Foundation for Youth Development, about creating sustainable change in young people's approach to personal finance.

Clare Woodcraft hopes to institute a long-term programme to improve the financial literacy of young Emiratis. Ravindranath K / The National

Clare Woodcraft is the chief executive of the Emirates Foundation for Youth Development, which this week hosted a debate on the lack of financial literacy among young Emiratis. The initiative is in the early stages, but the plan is to build a long-term social investment programme to create sustainable change in the way young people understand and deal with their personal finances.

When did the foundation realise there was a problem with Emirati youth understanding financial literacy?

Since we decided to have a focus on youth, which dates back to last year, we've been looking at various aspects of what comes under this type of social inclusion. Financial literacy really started to emerge earlier this year [when] we had interest from some of the banks. We did basic research among young people in the UAE and immediately you start to get a lot of media coverage, perhaps more anecdotal rather than statistical evidence showing that many young people are getting into debt.

Is the global financial crisis helping to highlight the importance of financial literacy here?

This is a global issue. Too many of us graduate from high school or college or university not having been taught the basics of how to manage our finances. How many people graduate knowing the difference between an asset and a liability? That is quite fundamental. Debt is not a bad thing per se if you use it to acquire assets and you can service it, but if you are using it to buy luxury products or a holiday or a car, none of those things are an asset.

Is the foundation working with other institutions to formulate a financial literacy programme?

Yes. The purpose of the event [this week] was to draw a call to action. So we invited representatives from government, banks, academia. The purpose of that was to get everybody in the room and say, 'Look, is this an issue that we want to address?' I think the consensus was a pretty resounding yes. I don't want us to be involved in one-time, one-off initiatives. I want us to build a long-term social investment programme, whereby for five or 10 or 15 or 20 years, you really work at this and start to create sustainable change in the way young people understand and deal with their personal finances. We want to put together a partnership. It could be of multiple organisations that can help us do that. But to identify which partners, we need to understand from everybody first what they are doing. That will be the purpose of the next workshop.

What do you see as the biggest challenges in getting the message across to youth in the UAE?

I think developing a culture of saving is a challenge in any country. In this day and age … two global recessions, people are perhaps focused on saving, but they simply don't have the disposable income to do it. Now here, you might argue that we have high disposable incomes. We live in a society where we are looking for instant gratification and consumption. There is peer pressure, especially on young people to maintain a certain lifestyle, there is lack of understanding of how you calculate your personal budget, how to live within your means, there is a lack of understanding about the cost of finance.

Is there any one issue that comes under the umbrella of financial literacy that stands out?

I think debt per se is a core part of this. So, of course, a savings culture is almost the antithesis of this, but I think helping young people to understand really what we mean by debt. Debt is not necessarily a bad thing. If you use it effectively and can service it, if it is within your means and you leverage it to acquire assets - that to me is a core part of it. If you are a young person and you want to get into debt, I wouldn't be against it, but use it for your education, to invest in investments rather than to simply fund a lifestyle or based on peer pressure.