x Abu Dhabi, UAEThursday 27 July 2017

On the Money: Parents integral in creating mini moguls

A new study by Doughmain.com, a US-based financial education website for families, has found that many parents are struggling to teach their kids about savings.

Gary Clement for The National
Gary Clement for The National

It's a surreal moment when your nine-year-old daughter suddenly announces that she is saving up to buy a hotel. The first thought that comes to mind is you don't want her to turn into another Paris Hilton. But then you remember Ms Hilton's been disinherited from the family's hotel fortune and that's why she is the way she is: making money any which way she can by searching the world for a new BFF, releasing truly awful songs and making cameo appearances in even worse movies.

So you breath a sigh of relief and remind yourself that your daughter is banned from watching reality TV anyway, so has no idea who Paris Hilton is. And hopefully never will - a highly likely scenario when you consider the fickle world of reality TV.

Anyway, my daughter's ambition to become a mini hotel mogul has come from an unlikely source: a free app for iPads called Monopoly Hotels. She's spent the past week building up her portfolio and now owns about five or six hotels, although her patience is being put to the test because she has to sock away tens of thousands of Monopoly Money (MM) just to buy a new property and then fit it out with guest rooms and other attractions. Even in the world of Monopoly, this doesn't come cheap.

The app is also what you'd call a bit of a fantasy world, where MM notes drop from the sky (if only real life was like that) and you spin a dice to win gold bars. The more money and gold you have stashed away, the more you can buy and build.

Her reaction to the app is interesting and she's been talking a lot about saving money, even if it is the Monopoly kind. It's heartening to hear because, at nine, she's at a prime stage in her life in which strong foundations are being built for responsible money management.

Then again, I did become a little concerned when she started saying she was only going to buy the cheap hotels and fit them out with cheap rooms so she could bask in the limelight of a bulging property portfolio, à la ghetto landlord types.

Which, predictably, saw me get out my old friend, the soapbox, and launch into my rendition of why quality was more important than quantity ... because quantity would always cost you more money in the long run.

Even more predictably, she rolled her eyes and bought another property on Old Kent Road, the cheapest of the cheap in Monopoly world, and then added a room that gave her a minuscule return, albeit every couple of minutes. If she'd saved a couple of thousand more MMs, she could have added the equivalent of a five-star room that would have given her a bigger return - a much wiser investment choice. But that brings us back to patience, which will always be an issue when it comes to tweens.

We all know that teaching children to save is one of the most valuable gifts parents can give and there's a lot of creative ways we can do that these days; the Monopoly Hotels app is a good example, so I'm encouraging my daughter to save her MMs in the hope that it will rub off in real life.

But a new study by DoughMain.com, a US-based financial education website for families, has found that many parents are struggling to teach their kids about savings.

The survey, released to coincide with America Saves Week (February 19 to 26), found that 81 per cent of US parents felt it was their responsibility to teach their children about money and savings. Sixty-three per cent of those surveyed said their children had a bank account, but just 27 per cent said they took their children into a "physical bank to make an account transaction at least once a month".

"The research exposes that while parents want to be the primary finance teachers to their children, they're just not doing it to the degree that's going to make a real difference for the next generation," says Ken Damato, the president and chief executive of DoughMain.

"Things as basic as opening a savings account or how to read a bank statement are just not being taught in the classroom, leaving parents to be the primary educators about finances, and they need solid, credible, simple resources upon which to rely."

The problem is not contained to the US - it is the same the world over, despite national financial literacy campaigns aimed at children and how to raise them as financially responsible adults. We have the same problem in the UAE. How many parents have opened bank accounts for their children here? And how many schools in the Emirates offer a financial literacy programme as part of their curriculum?

I can't think of any, although the likes of National Bonds and Abu Dhabi Islamic Bank have launched excellent financial literacy campaigns to raise awareness of responsible money management in the UAE; not just for adults, but also for children.

In the meantime, I'm steering my daughter away from that ghetto landlord attitude and encouraging her to think like a real hotel mogul. And to save. After all, who knows what will happen in real life?

fglover@thenational.ae