No excuse for not teaching financial skills as early as possible

It's a positive sign that residents and financial institutions in the UAE are beginning to recognise the importance of financial literacy. Responsible money management has never been more crucial than it is today, writes Felicity Glover.

According to studies, children as young as 5 are already able to grasp the basics of money and that it is needed to buy things. istockphoto.com

It's a positive sign that residents and financial institutions in the UAE are beginning to recognise the importance of financial literacy.

Responsible money management has never been more crucial than it is today. The global financial crisis and the multitrillion-dollar bailouts of the world's banks are proof of that.

According to Visa's inaugural Financial Literacy Barometer 2012, the Emirates ranks 15th out of 28 countries when it comes to smart money management and knowledge. Narrowed down, the UAE ranks first in the Middle East and North Africa region.

Understanding how to manage personal finances is a vital skill that every person should have. And the earlier it starts, the better.

According to studies, children as young as 5 are already able to grasp the basics of money and that it is needed to buy things - even if it is the latest toy they've seen advertised on television.

Teaching children the fundamentals of financial literacy goes a long way in helping them to become fiscally responsible adults who are less likely to mismanage their money by overborrowing, abusing credit cards or living beyond their means.

Financial literacy begins at home with parents, who are responsible for teaching their children the life skills they need to make their way in the world. While cultural taboos may prevent some parents from discussing money openly and teaching their children how to manage it in a responsible manner, there is no excuse for it in this day and age.

In a world where millions are paying the high price of a global economy teetering on the edge, the more open and honest parents can be about money, the better their children's financial futures will be - regardless of where they come from.

Some experts believe it should be a mandatory subject in all schools in the UAE. Visa Middle East, for instance, has created a financial literacy subject in Arabic and English for schools to introduce into their curriculums.

"We are in touch with the Ministry of Education to maybe pilot the programme in the next school year," says Lama Kabbani, the corporate communications manager at Visa. "It is in English and Arabic and we are also talking to a couple of schools to pilot that programme."

But the responsibility doesn't end at home or in school. Several institutions in the UAE have also jumped on the financial literacy bandwagon.

These include Abu Dhabi Islamic Bank, which last year launched its SmartMoney campaign, National Bonds Corporation, which has an education programme that promotes the importance of saving, and Visa, which aims to teach 20 million people around the world the fundamentals of smart money management. Emirates NBD, the UAE's biggest bank by assets, has also launched its Pay Yourself First Pledge, a platform it is using to encourage customers to save first, then spend. So far, 889 people have promised to save more.

"Responsible borrowing doesn't [just] start with schools or with parents to teach young children what the basics are," says Ms Kabbani. "I think governments and financial institutions have a big responsibility about this; to build this culture and habit into the banking industry."