Build financial literacy into UAE curricula

Parents may be ill-equipped to teach their children about money. Levels of financial literacy are generally low around the world.

Teaching financial literacy at the school level plays an important role in shaping school children to face financial challenges in future.

The OECD (Organisation for Economic Co-operation and Development) in its assessment and analytical framework report in 2013 focused on financial literacy education globally after the recession of 2009. The report adds that low levels of financial literacy have also been associated with a lower standard of living, decreased psychological and physical well-being and greater reliance on government support.

Financial literacy is the ability to make informed judgments and effective decisions regarding the use and management of money. Financial literacy encompasses a wider dimension that covers financial insights, financial capabilities and financial competencies. Being financially literate helps in avoiding dubious financial transactions and may help investors to make a more realistic financial judgment.

Thus, financial literacy empowers investors to make the right decisions and achieve financial stability. Financial education is a long-term process. Building it into curriculums from an early age allows children to acquire the knowledge and skills to build responsible financial behaviour throughout each stage of their education. This is especially important as parents may be ill-equipped to teach their children about money: levels of financial literacy are generally low around the world.

Seasoned education entrepreneur Robert Kiyosaki said one of the reasons the rich get richer and the poor get poorer, and the middle class struggles in debt is because the subject of money is taught at home, not at school.

Investment errors
Most of the research on financial literacy initiatives were performed in developed countries and focused on the local population or specific group of the country studied. Some of the major quintessential studies such as MoneySense in Singapore, ACNeilson research in Australia and Adult financial literacy group in the UK found that poor financial literacy is often associated with the direct result of poor basic financial skills. These studies collectively impart that without proper financial literacy, individuals made investment errors and are prone to make wrong decisions in the management of money.

With a gamut of investment options available in the market ranging from debt, equity and customised investment products, investors are perplexed in arriving at the correct investment decision. Error in investments are made in wrongly judging the market and having to bear the brunt of losses.

The UAE is a rich country in the Middle East. GDP per capita is $39,058, with annual growth of approximately 4.4 per cent. The UAE is vibrant and cosmopolitan, with a considerable number of expatriate population. In 2013, the UAE's total population was recorded to be 9.2 million. Out of the 9.2 million, the expatriates contributed to around 7.8 million, with Emirati nationals holding a population share of 1.4 million. With so much complexities and challenges, there was no formidable research undertaken to analyse the saving and spending propensity of the UAE population and how they rely on investment information to undertake saving decisions.

The Abu Dhabi Policy Agenda 2007/2008 developed Abu Dhabi Economic Vision 2030 to ensure all stakeholders in the economy move in concert. This involves focusing on four key priority areas: economic development, social and human resources development, infrastructure development and environmental sustainability, optimisation of government operations.

It is not surprising, therefore, that financial literacy is already a principal subject of discussion in the UAE, with a portion of the nation's economic development programme aimed at producing a financially knowledgeable society that will prop up a sustainable, diverse economy by 2030.
Several financial institutions have initiated programmes to resolve the problem.

Banks and institutions such as the Emirates Foundation and the Abu Dhabi Council for Economic Development as well as private firms must collaborate in introducing financial literacy curricula in schools to make kids financially strong in making investment decisions.

The writer is a UAE-based financial consultant. Views expressed are his own and do not reflect the newspaper's policy.