Why financial identity is the missing element in money education

Young people in the UAE are exposed to global consumer culture, rising living costs and constant financial messaging. Getty Images

Financial knowledge has never been more available – and financial stress has never been more widespread.

Budgeting apps track every dirham. TikTok influencers and YouTube tutorials churn out tips for every money problem under the sun. If knowledge were enough, we’d all be thriving by now.

Instead, people are still stressed and saddled with debt, regret and self-doubt. The issue isn’t the shortage of advice – it’s how we process it.

Many assume they already know enough. Others delay decisions, convinced they will figure it out later. And most get lost in the endless stream of tips without ever applying them – an example of information overload bias.

That’s the real problem. Knowledge is everywhere. What’s missing is financial identity – the story you tell yourself about money.

What is financial identity?

Financial identity is how you see yourself in relation to money. It’s a powerful mix of beliefs, emotions, values and self-perception – and it quietly drives every money move we make.

It isn’t about income or spreadsheets, but the inner script that guides behaviour: “I’m careful with money” or “I’m just bad at this”.

That script is shaped early by family messages, cultural norms, peer pressure and the constant noise of advertising. Over time, it hardens into beliefs. And those beliefs become habits.

This is why knowledge alone isn’t enough. Someone can understand interest rates or credit card fees and still overspend if their identity is built on guilt, avoidance or impulse.

But when identity shifts, behaviour follows. A strong financial identity brings clarity, resilience and confidence. A weak one leaves people drifting, vulnerable to peer pressure and undermining their own goals.

In short: skills and knowledge matter – but without financial identity, they don’t stick.

Why financial identity matters more than literacy tests

Globally, financial literacy is often measured by the “Big Three” questions – a framework used by the Organisation for Economic Co-operation and Development’s International Network on Financial Education and the World Bank in their global surveys and assessments.

They test whether people understand interest rates, inflation and diversification. Answer all three correctly, and you’re considered “financially literate”.

But here’s the flaw: someone could ace those questions and still max out credit cards, chase get-rich-quick schemes or make impulsive decisions that haunt them for years.

Knowledge isn’t the same as judgment. Literacy tests measure what people know. Financial identity shapes what they actually do – and it anchors choices when life gets messy, emotional or pressured.

Why this matters in the UAE

The UAE offers unique opportunities – and unique risks. Young people here are exposed to global consumer culture, rising living costs and constant financial messaging. Even with awareness of what they should do, the pressures of modern life can still push them toward overspending, lifestyle creep or avoiding money conversations altogether.

That is why shaping financial identity with care and intention matters so deeply.

And here the UAE has a chance to lead. By embedding financial identity into education and community life, the country can set a global benchmark for how the next generation approaches money – with clarity, resilience and confidence.

How do we build it?

Financial identity isn’t created by lectures or formulae. It’s shaped through repeated practice and reflection: connecting money choices with values and emotions; making micro-decisions through small, repeated actions like reflecting after a purchase; learning the language to name traps such as “sunk cost fallacy” or “lifestyle creep” so they can be spotted and avoided; and creating open dialogue where money conversations happen without shame and mistakes are treated as learning, not failure.

A call to rethink

If we want the next generation in the UAE to thrive financially, we must move beyond treating financial literacy as a knowledge exercise.

The deeper task is helping young people build a financial identity. When identity is strong, it anchors judgment and behaviour – and that’s what makes financial education effective, durable and transformative.

Marilyn Pinto is founder at KFI Global