Spending money can make a school kid financially aware

When 12-year-old Eman went back to school this year, she started to understand the concept of money as something that goes out of her wallet in exchange for that nice pair of sneakers, a burger to go, or the new sunglasses that she saw while she was scrolling. The little one had use of her parents’ card on her devices and could buy stuff, within limits. This year, however, her parents have started giving her spending money, digitally and in cash.

Globally, a survey shows that only 43% of children aged between 12 and 18 know how much money they have at any given time. How can Eman’s parents ensure that she becomes financially responsible?

1. Cash or digital:

Many parents in the UAE have started relying on e-money platforms. However, Eman still carries some cash.
A mix of cash and digital money will help form the right attitudes. Children say that when they actually see money on a counter, it helps them realize how much has gone from their wallets, as opposed to spending digital money.

2. Set up an account:

Ask your bank to help you set up an account for your child. Most banks, including ADIB’s Amwali, have specially crafted products for minors where they can receive money from parents, track balance and spending, make online payments, and even receive debit cards.
Check how to use parental controls to monitor the account, and set spending limits.

A financially aware child will know their limits. Studies show that more than 50% of teens say that they run out of money sometimes.
Experts say that children need to have a budget. This creates a habit of using the power of making choices to ensure financial wellness.

There are many ways to manage and spend your money from tap-and-go cards to mobile wallets and Buy Now Pay Later options. A financially aware child will grow up familiar with all of these.
Set up payment methods with your child and explore them together for the first few uses. If there is a regular payment scheduled, ensure that it is automated or paid on time.

Eman is being encouraged to save toward larger goals. While her pocket money is enough for daily spends on food orders and smaller purchases, she now sets aside small amounts weekly for bigger things.
A goal-based approach to saving can help the child build a savings habit. However, it is also important to grow toward a healthy savings and investment habit.

Do you know the pros and cons for providing a regular allowance for children as spending money?

Have your say…

What were your money habits in the early years? Join the moneysmart community to share your secrets!