The first of its kind in the GCC, Dirhami joins a growing list of financial literacy initiatives supported by governments with the aim of educating the pubic.
Dirhami aims to teach Abu Dhabi financial literacy
In Singapore, it's called MoneySENSE. In Canada, there is the Task Force on Financial Literacy, and in Australia, you have Understanding Money.
Around the world, governments are launching grass-root initiatives with one common message - in an uncertain world, citizens need to know more about their money.
It's a theme that hasn't been lost on the Abu Dhabi Council for Economic Development (ADCED). As part of the emirate's 2030 economic-development plan, the department has made financial literacy a top priority, and last month it officially kicked off its campaign to educate the public.
At the heart of the initiative is the website Dirhami (dirhami.ae), which provides convenient access to a wide range of financial advice. Meaning "My Dirham" in Arabic, Dirhami seeks to raise general awareness about budgeting, saving, spending, banking and investment options.
"It's a very personal project and we want every individual to relate to the website," says Salwa Fadhel, the project manager behind Dirhami. "We chose a signature for our logo because it's also a very unique and personal symbol. We're not directing people towards certain financial decisions; we're trying to guide people. Before you take any action, be aware of the circumsances of the decision."
According to a recent survey by ADCED, fewer than 20 per cent of UAE residents budget and keep track of spending. Just 30 per cent save money on a regular basis, the study showed, and only 27 per cent pay their credit-card bills on time.
In 2008, more than 5,000 investors lost hundreds of millions of dirhams in bogus funds, the report says. From 2006 to 2008, personal loans increased by almost 40 per cent. The study concluded that "low levels of financial literacy have resulted in worrying developments".
With this in mind, Ms Fadhel says the ADCED organised brainstorming sessions with leaders from various sectors, including education, government, insurance and banking. The Dirhami website, the first of its kind in the GCC, is the result.
"We have created Dirhami to provide our residents with the tools and information necessary to aid them in making sound personal financial decisions," says Fahad Saed al Raqbani, the director general of ADCED.
"The importance of having a financially literate society has been noticed around the world, which led many governments and private entities to launch such campaigns aimed at educating the general pubic on various financial issues."
While the website is tailored to various sectors of society - such as newlyweds, investors, families and retirees - Ms Fadhel adds that there will be particular emphasis on young people.
"To change people's attitudes and mindset you need to do it at an early stage," she says. "That's why we have included students in our programme as well."
Under the "budgeting" section for students, users can download an Excel spreadsheet for recording expenditures.
It also encourages young people to pursue summer jobs and paid internships to help finance the high cost of education. Credit cards for students is another a hot topic. Implusive spending is discouraged, and consumers should think about what they really need, rather than what they want.
In the newlyweds section, buying your first home, purchasing a car and planning holidays are given particular attention.
UAE nationals are directed to a number of government organisations offering assistance, loans and housing grants, such as the Sheikh Zayed Housing Programme (www.szhp.gov.ae). But Dirhami isn't just for beginners. The website also delves into the investment culture of the UAE.
Ms Fadhel says the way people are investing in the local stock market isn't always responsible, with decisions often dictated by rumours rather than hard facts or data.
The website includes a "Roadmap to investing wisely", which contains basic information on stocks, funds, controlling debt, and financing projects and purchases.
The section is broken down into a series of downloads that take you step-by-step through the ins and outs of investing.
In the introduction, for example, users learn about risk, the importance of long-term investing, the concept of compound earnings and the power of diversification.
More advanced lessons explain the nuances of bonds and mutual funds, how to buy them, and where these investment vehicles should fit into your portfolio.
Although these downloads are helpful, Dirhami contains more than written information.
One of the more unique features of the website is Dr Dirhami - an animated character who answers questions and provides financial advice.
Khalifa al Mehairi, an associate with the strategy department, says users can pose questions to the doctor and have them answered in a short video clip.
"We thought it was important to have a local figure that is associated with the campaign," he says. "This personality will help us carry the message."
That message, he says, is an acknowledgement that society's understanding of financial matters needs considerable improvement. Interactive elements, such as Dr Dirhami, won't appear on the websie for a few months, he says. In the meantime, Mr al Mehairi is working to reach out to universities, banks and other organisations to spread the world about financial literacy.
Indeed, the launch of Dirhami is only the first phase of ADCED's financial literacy campaign.
This year, a series of community initatives will take place with the intention of improving society's knowledge about money.
"The website is just a starting point," Ms Fadhel says. "Over time we will customise our approach for each segment and we look forward to more collaboration with our stakeholders. From there we will branch out and decide what is most useful and appropriate."
Tips for budgeting
1. Make a list of your daily expenses, including your daily cup of coffee, meals and other purchases. It may seem like the cost of these items is insignificant, but getting into this habit will prevent you from losing track of your expenses.
2. Once you have a list of your costs, make a budgeting sheet. Whether you prefer to use plan paper and pen to jot down all your expenses or other methods such as certain templates you find on dirhami.ae, organising your finances is a must. Set limits in your various spending categories each month and try to stick to them.
3. To avoid falling into debt, make sure that whatever items you opt to purchase, you have a steady source if oncome to cover the cost. Taking loans or credit without carefully considering how to repay them is a crucial error and can lad to serious consquences.
4. Differentiate between “good debt” and “bad debt”. You incur good debt when you make a purchase that is likely to increase in value, such as a house. and contriute to improving your overall financial situation. Bad debt is using loans for purchases you don’t need or can’t afford.
5. When paying credit-card debt, make sure you clear the entire amount, not just the minimum charge. Otherwise, the money you owe will just keep piling up with higher interest rates. Try to minimise the number of credit cards you have, as too many will probably get you into debt.
* Courtesy Dirhami