The most common question we have had parents ask us when we talk about Cashee is “ How can I teach my children the value of money?” or “ Living in the Middle East, I really struggle to teach my children the value of money.”

Sound familiar? Have you ever had this question or looked for a solution perhaps?

What do most parents struggle with when it comes to teaching children about money?

Over 80% of the parents we interviewed in the UAE and Saudi Arabia said that they struggled to teach their children about money due to reasons that have either to do with the parent or the child. Typical parent related reasons were 

⏱️ Lack of time
🧠 Lack of knowledge on what to teach
🛠️ Lack of resources on how to teach

On the childrens’ side, the top challenges were

🫠 Don't listen to parents
⏱️ Lack of time
🥱 Lack of interest

When do children start understanding the concept of money?

According to a research done by the University of Cambridge, children as young as age seven, start developing concepts that relate later to ‘finance’ behaviour and in their early formative years, can start mimicking behaviour and attitudes related to money they see their parents make.

Most millennial parents didn't grow up learning about money-management in a formal manner. Like me, they either learned about business finance in college or university and personal finance by self study or by trial and error. Most didn't start investing formally in stocks or real estate until well into their thirties. Is that what we would like our children to do as well?

What should we be teaching our children about money?

I, for one, would love for my children to be more savvy about money- how it works and how to manage it to their benefit and future- at a much younger age. A lot of parents get excited at the opportunity to teach their children about being an entrepreneur- let’s start a lemonade stand or let's make bead necklaces and sell them! But before they do that, especially as kids growing up in a society that offers a lot of abundance (more haves than have-nots)- how about we teach them the value of money first?

But how exactly are we to do that?

But what is the value of money 💸 ?

When it comes to children, teaching them the value of money is not so much about teaching them the time value of money or discounted cash flows or about supply and demand, but more how to value money. And this is not just for the wealthy families but for everyone. 

As someone who has grown up in the UAE herself, my family was, what I would define as, ‘middle class’ i.e there weren't heaps of money to spend and my parents had to be careful. As kids, we had to limit our needs and wants to stuff that was “affordable”. Even with a more humble lifestyle, there is still a big opportunity to teach children how to value money more. 

Cashee’s four point FAST 💨 method to teach children the value of money.

Cashee’s easy-to-remember FAST method helps parents with some basic steps they can take to get started on teaching their children about the life-skill called ‘money-management’ at even a very young age.

FREQUENCY

Money management lessons need more frequent discussions at home.

Research done by Cashee in the UAE and Saudi Arabia has shown that parents speak to children about money as often as 1-3 times a month. 

Now think about yourself trying to learn a new skill, say, playing tennis. If you were to practise that 1-3 times a month, how much progress would you really make?

Severely underestimated and under-discussed, the lack of discussions around money at home is a real problem. One that Cashee aims to provide a solution for.

Want to read our full report on Teen money management and Spending in the United Arab Emirates? Click here!

Experts recommend talking to children about money as frequently as possible, naturally weaving the conversations around not just the children’s, but also the family’s spending habits. These don’t have to be serious “let’s sit down and talk finances” kind of discussion, but more casual (yet valuable) interest shown in the children’s money lives as well as giving them a sneak peek into yours.

There is no shame in talking to children (once they’re a little older) about the money mistakes you may have made yourself, to take the spotlight off of them once in a while. The more you show them how open and comfortable you can be talking about money, and that money is not a negative or a taboo subject, the more you will help them adopt a similar attitude with money in their lives. 

ALLOWANCE

A regular allowance is an easy first step to teach multiple valuable money lessons.

Our research with parents and teens has shown that many parents give their children money only when they ask for it. The sums of money are not necessarily big and parents take pride in saying “My child is very careful with money I give him/her” or “ He/she is very frugal and doesn't spend a lot, and this is why I don;’t mind giving them money when they need it.” etc. Not spending a lot and spending only when it's required to spend are good lessons in themselves. So great job parents!

However, what could be better is to give them approximately the same amount of money in more regular intervals such as in a weekly or monthly allowance format. By doing so, you are encouraging your child to learn a few additional lesson such as:

How to budget their money

When a child gets money on demand, they really don’t need to budget for it. It becomes a question of parental approval at the moment of request. Most parents seem to trust their teens to say yes. 

Now imagine, if you were to give your child a lump sum amount at the start of the week or month and tell them- this is it. Manage all your needs and wants with this and don;t come to me until next month. 

Sound familiar? 

This is what most salary cycles look and sound like, forcing adults to budget their monthly expenses and investments.Why not start these lessons early for our children as well, by simply changing the frequency of giving them their money and thus helping them learn additional lessons!

The concept of scarcity

Most likely, all children, at some point or another will run out of money well ahead of their fixed allowance date. This is an excellent learning moment for them as you have just introduced them to the concept of scarcity (discussed more below). 

SCARCITY

“There is simply no way to understand the value of money without feeling the scarcity of it.” Morgan Housel

But how can we, with the abundant lives we lead, really teach our children about scarcity? There are ways you can teach children about scarcity without it hurting them, whatever your family income might be. 

Teaching about needs vs wants

Children can start ‘keeping up with the Joneses’ even earlier than we can imagine. Whether it's a new toy or game, or sneakers or even a particular birthday party theme, children are heavily influenced by what their friends and classmates are doing, wearing and saying. Giving into their demands each time or easily, can create the illusion that money is easy to come by and buying something doesn't involve a lot of decision making.

This is when teaching children the difference between needs and wants can come handy. Teaching them that even if we (as adults) can afford to do and buy all the things they wish for, we choose not to because we don’t need them.

Teaching kids about trade offs or opportunity cost

The concept of scarcity can also be taught in the form of trade offs. Want that X Box or PS5? Well, it’s going to cost you missing out on two months’ allowance or doing extra chores around the house. This concept, deeply rooted in economics, simply teaches kids the concept of opportunity cost and how to make informed decisions when resources are limited. You may be surprised at how quickly they may change their mind regarding buying that thing they so desperately needed!

TRACKING

“What gets measured, gets managed.” Peter Drucker

How many parents reading this article track your money effectively? Do you know what percentage of your income is allocated to needs, wants, savings and investments (if any). Do you know about the ‘holes’ in your budget, your money could be slipping through? 

Let’s face it. Budgeting and tracking your spends is time consuming! Unless we use a tool or an app that allows us to automatically analyse our spends, making time to track your spend consistently is a challenge for most of us. Yet, it’s such an important skill to teach your children early on- almost akin to learning the ABCs of money management. 

Cashee provides spending analytics for every single transaction made on the card and provides a simple and effective tool to really understand where, how frequently and when your child is spending, also giving you a full overview of their money habits.

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