x Abu Dhabi, UAESunday 21 January 2018

In debt at the age of six - oh, such horror and shame

At the tender age of six, my daughter learnt that you can buy whatever you want in life - even if you don't have quite enough money...

Illustration by Gary Clement for The National
Illustration by Gary Clement for The National

As someone who often writes about financial literacy education for children, I like to pride myself on getting it right with my own offspring.

I know it's never too early to start teaching your little one about the value of money, and pocket money is an essential tool for understanding money management.

So when my daughter was five and had a basic grasp of maths, I decided to give her Dh10 a week to help her save for toys or sweets - which have since been banned, thanks to a series of extremely expensive dental visits.

The first stumbling block hit early. I dislike carrying cash, which meant I often owed my daughter money. I'd scrabble around in my handbag, find nothing, and tell her we'd add it to the tab.

The same would happen the following week and when she asked how much money she had, I'd rattle off: 'oh, you've got Dh30,' or 'I think we're on Dh40'.

Her weekly allowance was topped up by visits from the tooth fairy, who generously dished out Dh10 per tooth and a bonus Dh50 after one particularly hideous dental visit that left both mother and daughter in tears.

The money piled up and this was where we hit another stumbling block. My daughter likes to move things. Money stored in one money box would then be transferred to another.

Or it might be safely stowed in a favourite pink purse one day and moved to a different favourite purse the next. It moved around so much that eventually it disappeared altogether.

I changed tack and introduced my daughter to a cashless society, recording her savings on a spreadsheet, adding Dh10 every week to the total figure.

It worked well. If she wanted a toy, some stickers or trading cards, we'd check how much she had and deduct the purchase amount from the total.

Then, last Christmas, I forgot to buy her a Barbie. Not a huge issue, I know, particularly as she has an assortment of 20-odd pneumatic dolls already.

But despite the lockable diaries, art accessories, sparkly clothes and so forth, her face was utterly crestfallen because Santa failed to deliver the desired PopStar Barbie.

There is no doubt today's children are spoilt and I could go into a long debate about how we are not teaching our little ones to value what they have - but that's not what this column is about.

I had actually taken the children to the shops in the run-up to Christmas because "Santa needs some help choosing your gifts and I'm one of his mummy elves".

What I failed to notice during that expedition was that while my three-year-old son hung around lightsabers - which "Santa" duly delivered - my daughter ignored the lockable diaries, art accessories and sparkly clothes and focused her attention on the Barbie aisle - in particular the PopStar Barbie stand.

Recalling this, I told her to use her pocket money to buy the said PopStar Barbie but checking her tally, she only had Dh20.

With the doll around Dh80, she needed to borrow against her future income and, here's the thing, I let her do it.

A couple of weeks later, my husband overheard me telling our daughter she could not buy another doll because she had four weeks to go until her pocket money started again.

"So, she's in debt?" he queried.

Oh, the dawning realisation; the horror; the shame. At the tender age of six, my daughter had learnt - from her own mother - that you can have whatever you want in life even if you don't have the funds in place.

Yes, she only owed money to me and, yes, there is currently only Dh40 left on her debt but I understood my husband's concerns. When teaching a child about money management, we must ensure we teach the right lessons, not the wrong ones.

To make myself feel better, I remembered that debt can also be healthy. After all, it is an interest-free loan with an extremely accommodating lender.

And if I look at myself, I would not have finished my degree without a student loan, and would not have bought a house without a mortgage.

While a Barbie doll doesn't feature on the list of life's essentials - it was what was important to her at that time.

We are now in phase three of financial literacy education in my home and new purchases can be bought only when sufficient funds are in place.

But I have not ruled out debt altogether because, on a positive note, my daughter has learnt you must repay all your debts in life eventually - big or small.

I'm getting there.