Why we must teach children about personal finance


And when they put their business plan together, they have to write cash flow forecasts, profit and loss accounts and balance sheets.

At Dubai British School, Year 7 students are taught about basic financial transactions - savings, spending and how a cheque works. A useful thing to know in a country where thousands, if not millions, of post-dated cheques are written each year as security payments against loans and rent.

In Year 10, students get to run their own enterprise, from business idea to raising finance to record-keeping and marketing. And when they put their business plan together, they have to write cash flow forecasts, profit and loss accounts and balance sheets.
Again, incredibly useful skills if they go on to found another of the 300,000-plus small to medium sized enterprises in the UAE, the backbone of industry in this country and accounting for 94 per cent of all business.

As my 19-year-old son (who has grown up in the GCC) prepares to fly the nest, I rue the lack of opportunities for young people like him to experience the world of work.

When I was growing up in the UK, I used to help clear my Aunt Polly's driveway of snow each winter - and, as a seven-year-old, turned it into a successful micro-enterprise. My only problem, as CEO and Chief Financial Officer and Chief Operating Officer, was working out how to divvy up the profits amongst my friends/ employees based on their wildly varying levels of productivity and commitment. However counting copper, brass and silver coins, apportioning the odd cake and packet of biscuits brought me many profit sharing as well as HR experiences. I realised at a very early age that the world of business was complex and stressful in so many ways.

In the UAE, there is little chance for young people to gain the experiences I had at such an early age (and this is not due to the lack of snow) or to earn pocket money with a Saturday job or a newspaper round, and few internships or even work experiences are available.

I think schools and parents alike have a part to play in educating today's children on personal finance, when they do not get to handle cash and shop tills.

In the UK, financial education was put on the curriculum two years ago. But a major campaigner and government advisor, Martin Lewis of advice site Money Saving Expert, says he is disappointed in how it has been implemented. He says there needs to be more focus on everyday issues, like credit card annual percentage rates, minimum repayments and compound interest.

After all, how good is our own knowledge, as adults? Can you explain a credit card monthly or annual percentage rate? Calculate compound interest? Or explain why it is dangerous to your debts, yet great for your savings?

Indeed, do you make regular savings? Experts recommend putting away at least 20 per cent of your monthly income to meet your financial goals, yet a recent National Bonds survey found that only 20 per cent of Emiratis saved each month, while just 35 per cent of expats saved for retirement (relying on end-of-service gratuities rather than pensions) and 37 per cent to buy a house.

We have a uniquely young population - a third to half of the Gulf is under the age of 25 - so it makes sense to educate our youth early on about budgeting and saving. Understanding the value of money is one of the biggest gifts we can give them and the earlier they start to learn the better.

Souce: Khaleej Times, 5th June 2016