At the top of my daughter’s wardrobe, gathering dust on the highest shelf, is the money box I bought her before she was born. I had high hopes back then – that we would use it to help her become a regular saver, stashing away birthday money and cash she earned from helping around the house to set herself up later in life. But the reality has been very different. We live in an increasingly cashless society (experts reckon we might stop using money entirely within the next 20 years) and she rarely – if ever – completes her chores. We’ve also moved countries three times so what few coins are in her money box are such a mix of different currencies that they add up to practically nothing. Instead, every time something catches her eye – and she’s four so that’s multiple must-haves per day – my daughter demands that I buy it for her. When I say no, which I frequently do, she has a meltdown and the message about things being expensive and having to save for things we want is totally lost in the stress of having to calm her down.

Although I know she’s still young, this total lack of interest in earning or saving any money and the expectation that I’ll simply buy her what she wants, regardless of cost, worries me. As I watch her rapid developments in other areas, it also makes me wonder – is she too young to learn about money or could I actually be missing the perfect time to teach her?

“The ideal time to start for any wealth success journey is the day that you are born,” author of Solving the Financial Success Puzzle, Gill Fielding, tells me, while Beth Kobliner argues in her book Get a Financial Life that although toddlers are more likely to eat money than want to spend it, children as young as three can grasp concepts like saving and spending. “You really can’t start too early,” she says, while a study by the University of Cambridge discovered that all of our children’s money habits are formed by the age of seven.

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But while children are capable of understanding money at my daughter’s age; it seems the vast majority don’t. Last year, an Australian ‘School Banking’ study found that 40% of today’s five-year-olds believed that you could use your credit card to get free money from the ATM, while 61% of six-year-olds thought it was free to download movies and games on their parents’ mobile phones. And, according to the experts, the reason our little ones are so clueless about cash isn’t because they’re young; it’s because of the habits they’re inadvertently inheriting from us.

“According to the experts the reason our little ones are so clueless about cash isn’t because they are young – it’s because of the habits they’re inadvertently inheriting from us”

“Try to lead by example when it comes to kids and money,” says chartered financial adviser, Lisa Conway-Hughes, who also runs a finance blog, Miss Lolly. “You inherit many of your financial beliefs by osmosis. There’s no point in kids being set up [financially], only for the Bank of Mum and Dad to be broke as soon as their parents face retirement. You have to teach them to take responsibility for themselves and there are lots of ways of ensuring your children are not scared of managing their financial futures.” 

Dr Rose Logan, clinical psychologist at the LightHouse Arabia, agrees. “As parents, we have a responsibility to model good financial management to our children as that is one of the most powerful ways of learning. Letting them know there is a family budget and that some things are luxuries or not affordable is great. But,” she warns, “If we talk about and model the value we place on money, our children will internalize this. Bigger worries should be kept for adult conversations.”

Fear of worrying her is definitely one of the reasons I’ve held off from having any money talks with my daughter. As someone who grew up in a household where money was tight, I’m mindful that I don’t want my daughter to grow up feeling anxious and stressed about spending. But in a place like Dubai where so many people are spending to excess, it can be hard not to pass concerns about money on.

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 “Money and financial issues are often a large stress [factor] for families in Dubai and the GCC more generally,” says Dr Logan. “The cost of living is high and often people are supporting close and extended family both here and back home. There is frequently little to save at the end of the month and so that leaves people feeling stressed.”

“[This] stress can be a contributing factor in the development of mental health problems such as anxiety and depression. It is clear from research that the rate of mental health problems in children and young people has increased dramatically in recent years.”

And it’s for precisely this reason that it’s so important to get children into healthy spending habits early on.

“Encouraging our kids to adopt lifestyle choices that will protect and maintain mental health and well-being is key,” says Dr Logan. “Children who are raised in homes where they feel a sense of emotional safety are at an advantage in almost all areas of development.”

So how can we make them feel safe – but not spoilt – when it comes to money?

“It mustn’t be a taboo subject,” advises Lisa Conway-Hughes. “Conversations about saving as well as spending are vital. People can either be threatened by or embrace managing their money. [But] money is related to so many other things in life. You want them to be spending within their means when they grow up, rather than staying awake worrying about how they are going to pay off their debts.”

“It’s important to teach your children that money is fun and so encourage them to spend whatever they do with fun and a flourish,” says Gill Fielding. “Spending money isn’t a bad thing as long as you can afford it. We deserve the right to buy stuff and enjoy it.”

Fielding makes a good point – while I want to teach her to be careful with money, she needs to know it’s there to be enjoyed as well. Like most parts of parenting, money matters seem to be about finding a balance – and not shying away from difficult topics. I resolve to spend a little less time worrying about money myself and find examples in our everyday life that show her the reward for working hard is being able to treat yourself. Oh, and perhaps I’ll dust off that old money box after all… 

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Tips on saving for a baby in high-cost Dubai