UAE children need to learn how to manage money early in life, experts say

Entrepreneurs and organisations in the UAE have noticed a need for more ways to instil financial responsibility in young children.

Kamal Moumneh is developing an educational and interactive money management system for children, the Life Hub. Delores Johnson / The National

DUBAI // It was the financial crisis six years ago that led a Dubai entrepreneur to realise that more needed to be done to educate children about money.

The 2008 recession showed that financial literacy was one of the most important social and economic issues of our time, said Kamal Moumneh. “I saw that there was a market need for education because what’s been happening hasn’t been working,” he said.

Mr Moumneh is one of several people and organisations in the country who have noticed a need for more ways to instil financial responsibility in young children.

He decided to try to figure out a way for children to learn money management at a younger age – as early as three – that could be used throughout their childhood.

So Mr Moumneh built a device called the Life Hub, which is both a physical bank and a computer with financially relevant games and tools that allow parents to assign chores.

He has a prototype and has set up a company to develop animations and content to market the product, which he hopes to have finished by the middle of next year. He has also been meeting local organisations, such as the Emirates Foundation, for potential collaboration.

In a wealthy country such as the UAE, financial literacy is crucial for children, Mr Moumneh said.

“This is a global problem. The UAE is having tremendous issues with overspending and debt accumulation, especially through the younger generations,” he said.

Statistics show that about 70 per cent of Emiratis under 30 are already in debt, according to the Emirates Foundation’s financial education programme, Esref Sah.

Launched last year, Esref Sah holds workshops at schools and is working with the Ministry of Education to incorporate financial literacy into the national curriculum.

Another organisation, Fils Planet in Dubai, was set up late last year and offers interactive lessons for children aged seven to 17.

The group aims to help children to develop financial responsibility as a life skill while reflecting the local culture, such as donating to charity and sharing with loved ones, as well as investment.

“These kinds of things you will not learn in an academic way, or in a way where you just learn the terminology,” said Saad Al Rubaiaan, managing partner at Fils Planet.

But Mr Al Rubaiaan said the organisation found that teaching children could be a challenge if parents did not also have the skills.

The consequences of not teaching children about spending and saving wisely can be “financially disastrous” when they become young adults, said Dr Veena Luthra, a psychiatrist at the American Centre for Psychiatry and Neurology in Abu Dhabi.

“Many young adults have never been taught to budget and, despite earning good salaries, do not save for a rainy day, or spend excessively without understanding the responsibility of paying bills,” she said.

Children can start learning about money as soon as they start asking for things, about age three or four.

“You want the child to learn early in life that money has to be earned and their parents work hard to get money,” said Dr Luthra.

Parents can teach children to use a piggy bank and provide an allowance, encouraging them to save, but they should be allowed to make mistakes with spending and learn the consequences, said Dr Luthra.

“Children need to learn early in life that money cannot buy happiness,” she said.