Finance 101 for Children
An age-by-age guide to get children in the habit of understanding money and saving.
When I was younger, my siblings and I were given pocket money on a monthly basis. What we wanted to do with it was completely up to us – it was usually spent on accessories I didn’t need and copious amounts of candy or snacks at the ice rink or cinema. We were always told to save, however, the habit didn’t start young and looking back, I do regret it. The addiction to spending came about quite easily, although over the years I’ve realised it’s about spending wisely – rather than just on anything and everything I want – or better yet, living by Warren Buffet’s quote, “do not save what’s left after spending, but spend what’s left after saving.” If youare looking for ways to introduce financeto children, there isn’t a better time than today. Follow our nifty age-by-age guide.
Ages 2&3
Begin with the different size coins, 0.50fils and Dhs1. At this age, try to play the coin identification game. Trace the coin on a sheet of paper and colour each shape. You can then ask your toddler to match a coin with the shape on the paper. Make sure to provide close supervision at all times as your toddler may try to swallow the coin. To make the activity even more exciting, create a play store. Keep a selection of goods that are worth a few Dirhams and teach them how to exchange money for goods. Use cereal boxes, a toy, colour pencils, or anything you think your toddler may be interested in buying.
Ages 4&5
Before heading to the supermarket take along any cash vouchers or coupons you have kept aside. A great one to start with is the Carrefour MyClub points voucher where you get points when you spend a certain amount on a product category. Tell your toddler to keep an eye out for the products and notify you when spotted – the vouchers are usually for bread, dairy, frozen items, etc. This will keep them alert at all times and give him/her the feeling of helping out.
Ages 6-8
Start giving them a weekly allowance, and create a savings account for them too. “Even if it is just a couple of hundred dirhams each month, over time it will earn interest which in turn will earn interest and accumulate into a nice little savings pot. There are many savings options available so shop around for the best options, and even better, seek professional advice” says Hamzah Shalchi, Regional Director of Guardian Wealth Management. FAB, ADCB and ADIB are just some of the banks that offer children’s savings accounts (visit souqalamal.com or yallacompare.com for more information). You can now teach them the concept of interest too. This is also a great age to start coin collection as a hobby.
Ages 9-12
Since your child is able to read and understand price labels, take them along on your next shopping trip. Teach them to compare bulk items to other products, keeping quality in mind and try to do this activity for one product at a time – you don’t want them getting bored on their shopping trips with you. For example, begin with a renowned brand of chocolate and compare it to a store-or generic-brand, making them understand the differences behind the brand name and whether it is worth the cost. It’s also worthtaking your 11 or 12-year old to flea markets,teaching them how to haggle and buy items for the price they think it is worth.
Ages 13-15
The stock market may still seem a little daunting to all of us, but a child’s early teens are a great time to introduce children to it. Each week your child can monitor astock, watch financial news and research how the stock values fluctuate. At this ageyou can also teach them to budget for an item they have their eyes on. This is also a great time to teach children about social responsibility and giving money to charity. It’s best to let your child pick the charitable organisation that interests him/her and donate to that particular organisation or cause on a monthly basis, or whenever possible.
Ages 16+
Most children spend their money while hanging out with their friends at the mall or theme parks. Given them store-value cards and a debit card that enables them to collect points, so that they can redeem this at a store they prefer. You can also give them a pre-loaded card with their allowance.
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