DUBAI 8 April 2018: In an effort to turn the UAE into a nation of savers, leading investment company National Bonds is encouraging UAE residents to confront saving challenges head-on. The firm is calling on members of the public to open up about the challenges they face when it comes to savings and seek the answers they need to achieve their financial goals. National Bonds provides trusted advice on how to save – so what better place to start than here?
If you have a burning question for our resident doctor, send it to: SavingsDoctor@nationalbonds.ae.
Q: My wife and I would like to teach our five-year-old daughter the importance of saving, but we are not sure where to begin. How do we explain the concept of saving in a way that she understands and appreciates at her age, and as she grows older?
A: As parents, you want not only to protect your children’s future, but also to make sure that they are able to make responsible decisions for themselves in the future, so it is commendable that you and your wife have set the goal of teaching your child about the importance of saving.
In fact, it is a common mistake for parents to wait until their children start learning about finances much later down the line before approaching the topic of saving. In order to truly have an impact on their child’s future, parents should begin teaching their child as early as possible through small but meaningful actions.
It may seem like a daunting task to explain a concept like saving to a child in terms that they would understand, but the good news is that it is actually surprising simple! There are several ways to teach your child, depending on their age of course, as different ages require different methods of explanation. The practical tips below will give you an idea of how to get started:
Savings Activities by Age Group:
• Discuss how you may value something that is free, such as playing with a friend.
• Find three jars (or cans) and label one for saving, one for spending, and one for sharing.
• Suggest that your child put some of the money she gets into the saving jar, so she can buy a toy or treat when she has saved enough.
• Include your child in some of your small decisions. For example, at the grocery store, explain why you pick one item over another.
• With your child, compare prices for a particular toy at various online stores.
• Consider opening a savings account for your child.
• Have your child set a goal to buy something she wants, and have her work towards that amount.
• Encourage your child to always save 10% of the money she gets.
• Consider a “matching plan” for your child’s savings: You put in Dh50 for every Dh100 she saves.
• Teach her to Invest as soon as she has some income, with a diverse mix of stocks, bonds and cash to avoid risk
• Ask her to define two long-term financial goals for the future, and make a plan for achieving them
• Teach her how to make a list of her expenses (rent, bills, food) to see how much she spends each month
Through these simple activities, you can ensure that your child values saving more and more along their journey of learning. When she is a bit older, you can put the power to save in her own hands by encouraging her to open a savings account and access programmes such as myPlan, which will let her personalize her savings plan.
For the milestones to come, such as birthdays and visits from the tooth fairy, consider gifting her a gift voucher for a gift that secures her future and keeps on giving.
Perhaps most importantly, the importance you and your wife clearly place on savings will inspire her to learn more. As you share your own advice with her, remember that you and your wife can always turn to experts for advice as well!
You can always speak to a certified financial planner.