Set the foundation so your kids can create wealth and become financially secure
Modern schools have begun teaching finance basics to students at young age. These theory based teachings may provide presumptive education, but debt and consequences has yet to be fully explored on a large scale. Some options for real-world money management, although very limited, come across as work. For example, children can participate as cast in movie productions or fashion shows and get paid for it. Some professional sport clubs in Dubai are also paying salaries, in the range of few hundred dirhams, to hard training junior players. Still, for many parents the question remain: How do we teach our kids about finances before they’re buried in debt?
Many psychologists and financial experts agree that children should begin learning about real-world finances in Junior school – when they are already developed enough to understand the concepts presented, yet are not predisposed to the details. Without this knowledge, it is feared that students will enter into the world of debt without a bigger-picture understanding and will carry their bad, or simply uninformed, habits into high school, college and adult life.
Most college students nowadays hold a credit card. This is despite the fact that people under the age of 18 need parental consent to even apply for one. An interesting fact to consider is that many college administrations point out credit and debt issues, but not grades, as a reason for the majority of college dropouts.
The Piggy Bank
Web sites like Prosperity4Kids have dedicated their services to teaching kids the importance of financial knowledge and “smart” investing. And it all begins with one of the most basic inventions that can be found in almost any home: the Piggy Bank
P4K licensed the “Money Mama” piggy bank, which is essentially the same as a regular piggy bank, only it encompasses four coin chambers, not one. Children are encouraged to divide their “earnings,” (allowance, chore money, gifts) into four categories: give, invest, save and spend – the basics of sound money management. This concept branched out into a number of other products, including books, DVDs and online education.
The Old-Fashioned Way: Fake Gambling!
Possibly the most effective method of teaching financial education for kids is to make a game of it. Monopoly
By creating a set of family rules – substituting the official rules of the game with “house rules” – players can make the game as much about education as they want.
While it’s important for children to learn about financial responsibility, the movement does have its detractors, who feel that these methods are encouraging the youth to rely on debt, banks and credit cards to survive. Still, with the right guidance and knowledge and some common sense, kids can stand with their heads high in the world of finance, knowing they are ahead of the curve.
KidZania®, the award-winning edutainment concept promoting the physical and intellectual growth of children through professional role-plays, has opened at the Dubai Mall. A day-long entrance priced at AED125 per child may be a bit too much for many parents, but the educational experience is worth it. KidZania® is a fictional town where children should ‘work’ to earn money. Attending Kidzania’s university prior to it, enables the youngsters to earn higher salaries. The town has its own streets and houses, its own currency and even its own banks, where kids can open bank accounts and receive credit cards. The different activities resemble exactly the Dubai life and children learn and practice daily financial tasks through play.
From Game to Reality
Whether we like it or not, credit cards and debt are in our daily life to stay. When the economy is good, we buy knowing that we can make the minimum required payment, while when it’s bad, we use credit as a cushion to supplement our regular income. And these habits aren’t genetic – they’re taught to us through observation of our family and friends, and through opportunities given by banks and lending institutions. This is not necessarily negative, if you know the rules.
For the majority of people, credit availability will aid well-being at some time, whether that is when it is time to buy a house, a car or save for children’s tuition. The trick is to get a head start in financial education, and not enter the race with a fiscal handicap.
