Schooling Kids In Money Matters

We get it, school is expensive.

And we are not even talking about school fees, extra-curriculars or after-school tuitions. We mean the daily expenses that come with having children. Dubai parents are famously generous, with monthly allowances for high-school seniors hitting AED 1,000 – AED 1,500 per month. Giving teens and tweens ownership of that kind of money goes hand in hand with educating them about the value of money – how to save, spend and manage so that they value meaning experiences and products over frivolous impulse buys. However, with mobile bills, movies, eating out, allowances tend to take a pummeling and these personal investments, like taking a gap year or purchasing that classic Les Paul guitar, are put on hold.

Most millennial and Gen Y parents learned financial management on the fly, in college or at their first jobs.  That knowledge was hard-earned, and it is critical to arm the next generation better and early. Parents need to give them a basic understanding of managing their budget and the virtues of saving while they are still in school.  Here are three simple rules to get your kids started:

1. Start Today: Whether they are 7 or 17, students should start saving today. As a rule of thumb, a student should save at least 40% of their allowance to buy more meaningful things – a 10-year-old, receiving a daily allowance of AED 10 and saving at least AED 4 every day, will pocket AED 120 in extra cash at the end of the month. Committing early to a small daily saving like that means that even if their allowance stays the same throughout their school career, they will have over AED 10,000 in extra cash by the time they graduate high-school.
2. Be Committed: Child or teen, students should commit to saving a set amount every month. A 10-year old who saves AED 120 every month, will add a not-too-shabby AED 1,440 to their savings at the end of the year. If your high-school senior of 17, with an allowance of AED 1,000, saves AED 400 per month, they will bank a hefty AED 4,800 in savings at the end of the year. Parents could help their children grow their savings by putting it in a savings account for them. An example of a savings account is the Standard Chartered Saadiq XtraSaver account which offers a profit rate of up to 2%. This could add an extra AED 100 at the end of year with zero effort if a child already has AED 4,800 in savings.
3. Be Wise: Good money management is the line between contentment and misery. People are more motivated to save their money when they have a SMART (Specific), Measurable, Achievable, Realistic and Timely) goal in their mind. For students, this could be self-funded trip to Sri Lanka for summer or owning a percentage of their college fund, that will help them stay on top of the expenses and give them a lifelong desire for financial independence. 

Saving money comes with little daily sacrifices but in the long run, it repays students with a wealth of financial expertise, independence and confidence. To get your children started with the savings habit, please visit https://www.sc.com/ae/deposits/saadiq-xtrasaver