How to Start Your Child’s Journey Towards Financial Literacy This Summer Break?

The long summer vacation is certainly a great time for children to take a break from school and the scorching heat out there! That doesn’t mean the learning stops though - children can indeed try their hands out at new crafts, activities, and whatnot!

Why not do this for finances? With an early start, you can help your children grasp the complex world of finance so that by the time they are adults, they are capable of expertly planning and managing their finances on their own!

And here’s the thing - you have plenty of easy options that can make the financial world quite interesting (and informative) for your child!

The Classic - Pocket Money

The concept of pocket money has become popular throughout the world over time, and it’s indeed a good starting point if you haven’t done it already!

More than simply giving money to children to spend on their favourite video games or gadgets, pocket money gives them a rough idea of managing expenses, savings, and more. It also helps them learn how they can allocate money for different types of expenses and financial goals.

Discuss and Set Proper Financial Goals

The old advice of setting financial goals, among the most popular entries in the New Year resolutions, is applicable to children as well!

A key part of financial literacy is financial planning, i.e., managing and growing money to meet particular goals in the future - be it education, purchasing a car or home, etc. Discussing your own planning for these milestones with your child can set an example here. You can also encourage them to set goals (no matter how big or small) from their own pocket money.

Get a Bank Account for Children 

While piggy banks are good for starting out, your children can learn so much more with bank accounts - be it savings, withdrawals, or understanding their monetary habits with bank statements.

Many banks offer children-specific bank accounts/sub-accounts like YAP (in partnership with RAKBANK), Shaatir account from DIB, EarlySaver by Emirates NBD, and more. With these accounts, you, as a parent, can let your child get a hang of banking, all while having the option to monitor the account and intervene if and whenever required.

While we’re on the topic, it’s worth emphasising that this also extends to credit cards (specifically for teenagers), with various providers allowing teenagers to get supplementary cards.

Giving credit cards to children can be particularly worrisome for parents, with all the high fees, the possibility of fraud, penalties for failing to clear the dues on time, and more. However, with proper guidance, it can be a valuable learning experience in terms of debt management and mindful spending. For this, a discussion about the benefits of credit cards AND consequences of poor debt management with your child can be a good starting point.

Bottomline - Communication is the Key!

While following the tips above, it’s absolutely important to take out time and discuss your own financial strategies with them and even seek their opinions on the same. Ultimately, financial literacy, just like standard literacy, is a long journey and requires proper communication and effort throughout.

You can start by encouraging your children to devote time to learning about money, markets, different types of currencies, financial instruments, banking, and others on their own. You can even include them in your long-term planning and get them acquainted with the basics of investing.

Let’s make this summer a financially fruitful one for your children!