Start Financial Literacy Early: 11 Practical Money Saving Tips for Kids in the UAE
Learn the top money-saving tips for kids in the UAE and help your children learn how to manage their finances.
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In the quickly changing world of the UAE, teaching kids how to handle money is important. Saving money is a big part of being financially safe. But many of us didn't learn how to handle money until we were grown-ups, and we have had to figure out how to be careful with money through tough experiences. It's funny how many of us only became "money experts" after surviving a few wallet-draining adventures.
However, do we want that for our kids too? Wouldn't learning a few money-saving tips for kids be a better way around it?
Parents have a tough job helping their kids learn to be smart with money. And since kids in the UAE grow up with lots of opportunities to spend money, knowing how to use their cash wisely is a big part of staying financially healthy.
Nowadays, mothers and fathers in the UAE face many issues when trying to save money for their family. For example, the country’s consumerist culture, high cost of living, and most importantly, a lack of time to research and learn about personal finance.
Therefore, we did our homework and yours by reaching out to professionals in the field to cover the following topics:
[Encourage your kids to make regular small deposits to the savings accounts and visually track the growth of their savings through MALY, the money-saving mobile application that’s good for you and your finances.]
The financial wellness of a person can and should start at a young age.
By learning early, children can start understanding how money works and how to build a healthy relationship with it, establishing a foundation of financial literacy that they’ll take into their adult life.
Lynn Gobert, a nationally certified credit counselor at Pelican State Credit Union, says that “children are like ‘education sponges’ in the first five to six years of their lives. They can easily be taught to speak foreign languages, play musical instruments and even make sound financial decisions at this early age. In regard to developing those skills, the first financial skills that are usually introduced are saving and managing money.”
Teaching kids about finances gives them the skills and knowledge to make informed decisions about managing money. This can have a crucial impact on their future as they learn how to budget, understand credit and debt, and avoid catastrophic financial mistakes.
Teaching kids money-saving tips offers plenty of benefits that can polish their life skills early on.
Teaching kids how to save money will show them that money is not easy to earn. This helps them develop a stronger understanding of the value of money and make more responsible decisions when it comes to spending it.
One of the main fundamentals of saving money is having children consistently put aside some of their money, like pocket money. Such behavior can be extended to their lifestyle, as it trains them to be disciplined about saving money and other activities.
Kids who adopt saving habits in their early years are more likely to continue saving when they grow up. They will learn not to waste money on useless things and instead focus on more effective money habits such as budgeting, investing, and planning for the future.
Financial independence is a daunting goal for anyone, especially for younger people. Learning to save from a young age allows kids to be more responsible and independent. Not only with money but other things in life, they will learn to delay gratification and wait for something they want. For example, instead of rushing to their parents for something they want, they will learn to save up and buy it with their own money.
The combination of learning the value of money, discipline, and responsibility develops kids' money management abilities, which is one of the crucial skills everyone needs to master. Such a mindset will keep them safe and away from unnecessary debt and credit-related issues in the future.
Preparing for unexpected emergencies is usually a costly tough lesson for most people. Learning to save money will teach kids the importance of having some money aside as a financial safety net. Such understanding can be developed at an early age. For example, if their bike breaks, they can use their saved money to fix it instead of asking for money from their parents.
Whether it's a new bike or a college education, saving money helps kids learn how to set goals and prepare to achieve them.
As explained, teaching kids money-saving tips is important, but when should you start?
The timing of when to start depends on the child's developmental stage and readiness. Here are some general guidelines:
At this early age, the best practice is to introduce the concept of money and familiarize kids with money as a medium of exchange for goods and services. Parents can start engaging with their kids in simple activities such as counting and sorting coins. They can also use role play to simplify the process of using money, such as using a toy store to teach kids the buying and selling concepts.
By age 6 or 9, kids start to engage in more advanced money-related activities. At this age, parents can start giving kids some money, such as a weekly allowance, to teach them how to manage money, learn the basics of budgeting, and allocate funds for spending and saving. They can also start talking to kids about the importance of credit and debt.
Around 10 or 13 years old is a good age to start talking about investing and earning money and how to manage that. Kids will have more complex allowances at this age, so it's important to teach them to handle them responsibly and encourage them to budget for various categories. Parents can also introduce them to bank accounts, such as opening savings accounts for them. Additionally, they can teach kids the connection between work and earning money.
As teenagers, it's a good time to introduce the work concept and encourage them to do some part-time jobs and learn more about earning regular income and paying taxes. Additionally, they will be more prepared to understand the concept of financial planning and setting future goals.
It's important to remember that every child is different and learns at their own pace. There is no one-size-fits-all answer to when to start teaching kids about money. However, by following these general guidelines, you can help your child develop the financial skills they need to succeed in the future.
Teaching money-saving tips to kids is an ongoing journey that goes on throughout different stages of a child’s life. Here are the best ways for kids to learn to save money and how to teach them about it.
Money talk shouldn’t be taboo or scary.
Indeed, not talking about money can send the wrong message. Parents must start conversations about money and saving with their kids.
“Every child’s very first teacher is their parent, this means early money lessons in the home are critical.” says Yanely Espinal, director of educational outreach at Next Gen Personal Finance, a nonprofit personal finance organization.
A survey conducted in the US in 2022 by Momentive, an American experience management company, showed that 83% of parents think they are the most responsible for teaching kids about money. However, only 15% talk to their kids more than once a week about household finances.
Who should be responsible for teaching kids about their finances?
Source: CNBC
Talking to kids about money and saving doesn’t require a 3-hour presentation. Instead, the easiest way is to start by introducing money’s basic concepts and explaining what it is and what it is used for. “Developmentally, kids can understand from a very early age that you can do four basic things with money. You can spend it, save it, invest it or give it away,” Mac Gardner, a certified financial planner and author of The Four Money Bears.
Parents should also start using some money terms such as earn, spend, or save – and then explain how they work and how to use them daily.
Also, use real-life situations to introduce and teach kids about money. For example, when receiving the internet bill, explain to the kids that their internet is not free, and we have to pay for it from the money we earned from hard work or saving. Or, when using the ATM, explain to them that the ATM is not a magic tool that generates money but gives you the money you earned and saved in your bank account.
An essential step in developing financial literacy for kids is to teach them how to distinguish between “wants” and “needs.” They need to learn that they can’t get whatever they want, and they need to prioritize things.
Start explaining what the needs are, like, as a family, you need the basics such as food, shelter, basic clothing, healthcare, and education. And any extras such as movie tickets or that new bicycle are all “wants,” and they can be postponed or you can work to save money to get them.
Involving the kids in simple activities can help teach them about their “needs” and how to spend money responsibly on their “needs”; for example, in the grocery store, explain that groceries are “needs” but snacks are “wants.”
[Looking for the top groceries to spot deals? Read our list of the 7 cheapest supermarkets in Dubai.]
Saving money is challenging at any age; there is just always something to spend money on, and that is especially true in the UAE.
This can be even harder for some kids. Therefore, parents should help kids by setting goals for them. “Setting money as the ultimate goal is sure to result in frustration. Therefore, parents should work with their children to develop a set of personal goals and show them how money can be used to help achieve these goals, rather than simply accumulating cash,” Chaddy Kirbaj, Vice Director at Swissquote Bank Dubai.
Start by discussing their savings goals, which can be a new video game or a family goal that kids can contribute to, such as a family vacation. Start by setting how much money is needed and how much money they have for every period, like every week, then develop a timeline for achieving the saving goals.
Most importantly, explain that the process of saving money takes time and that they should be realistic about their goals, and ideally set goals that are obtainable to avoid them from getting frustrated.
Kids need to see their progress to remain interested; therefore, it is very important to offer a visualization of what they collect and how much is remaining. Charts can help in visualization of the money-saving timeline. For example, parents can use a big whiteboard and start to draw two lines of a chart, one for days and one for money, and then post mini goals like 25%, 50%, 75%, and 100%. Every week you can add some star or other charm, depending on the saved money at the end of the week.
There are also many other visualization tools for measuring success, such as the Candyland reward jar for kids.
Kids are very intelligent and notice everything their parents do and try to copy. “Whatever parents are doing, the kids will follow suit,” says Bob Harper, personal trainer, reality television personality, and writer.
Therefore to teach the best ways for kids to save money, parents must set a good example for their kids. Kids will even notice how their parents talk about money, whether good or bad; if parents always fight about money, kids will think that money is bad.
Engage with kids in everyday situations, explain how items are priced in the supermarket, and show them how to search for cheaper versions of the same product.
Keeping money stored and safe is another financial skill kids need to learn. They can start by storing the gathered money in small jars or boxes and hiding it safely. This way, kids will learn how to keep the money safe and, most importantly, out of sight to reduce spending temptation.
Saving money away is good for preparing kids about the importance of emergency funds early on.
Usually, the first income source for the kids is an allowance or pocket money, which is very important to help them to interact with real money and build up their budgeting skills.
Parents can choose to provide weekly pocket money, making kids manage their spending throughout the week. Some easy ways to help children are using save/spend/give jars, a simple visualization of budgeting.
Additionally, it’s important to encourage kids to get to their saving goals faster by offering them a way to gain extra money. “Instead of giving them whatever they ask for, reward them for doing chores such as cleaning their room or taking out the trash,” Mr. Kirbaj says.
Kids can get paid for doing some chores and tasks at home, such as getting ready for school, feeding pets, putting clothes away, emptying bins/recycling. And for older kids, they can choose to get a part-time job or summer job.
Also, kids love challenges, so parents can offer some treats if they reach the saving goals within a certain timeline. “Offer to match their savings as a parent or godparent, up to a certain percentage, much like most employers when it comes to defined contribution retirement plans. This will incentivize them to save for short-term and long-term goals and help them build the habit of saving early on,” said Derilyn Freeman, a certified financial planner at Prudential.
“The only real mistake is the one from which we learn nothing,” said Henry Ford. Teaching money-saving tips to kids is a long journey that takes time and effort, and along the way, mistakes will happen. Kids might spend their whole allowance at once on one short-lived gimmicky toy or just not save enough money.
These mistakes require parents to be mentors and explain to their kids how to be responsible for their mistakes – and that their parents won’t bail them out every time. Also, such an open conversation can build a healthier connection with the kids to know the real reasons for their mistakes and work on solving them.
Kids are very active and sensitive and can be easily affected by their surroundings, especially their friends. One of kids’ biggest mistakes is spending money just to keep up with their peers. A parent’s role here is to guide their children and explain the importance of spending money on what they want instead of spending it to match with others or to be popular.
Also, one of the best solutions is to encourage kids to find a saving buddy, a friend, or a family member who is also saving. They can experience the fun of saving together, and promise to have each other’s back when one has a problem or just loses focus.
How to healthily use credit is one of the biggest financial problems that people face. Therefore, when kids become teenagers, introducing them to credit and how to deal with it will keep them away from daunting debts.
Parents can start by discussing credit and how it works, as well as enroll their teenagers as authorized users on one of their credit cards, as long as the teenagers will pay back the money they spend. This will build more trust and make them more responsible.
Encouraging your child to open their own savings plan can be a fantastic way to inspire them to save money. Ensure you have a conversation with them about how savings function and the significance of a savings plan.
You can opt for an account such as MALY, which offers online or app-based tracking of their savings progress to make the process even more engaging. This allows kids to make regular small deposits to a savings card that they can visually track as it grows.
Savings plans like this are the new norm, and can go a long way to starting a healthy relationship with money at a young age.
[Looking to set up a weekly or monthly savings plan, or automate savings from your daily purchases. Simply connect MALY to any UAE-based bank and start tracking your savings as they grow.]
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