Are your children enjoying a very different lifestyle to the one you grew up with?
For many expat families living in places like Dubai, the lifestyle can be fantastic – and that’s certainly not a bad thing!
But growing up around swimming pools, maids, and amenities galore, is not necessarily conducive to developing financially responsible young adults or teaching the value of money.
Therefore, teaching children about money from an early age is crucial to ensure they grow into financially responsible adults.
In this article, we’ll cover 9 basic strategies parents can use to instil good money habits and foster healthy values in their children.
1. Start Early: Introduce Basic Concepts
The best place to start, is usually the beginning!
Introducing basic concepts early in life is one of the most effective ways to raise financially responsible children.
Start with simple ideas and concepts, like earning, spending, and saving.
For example, giving your child a physical piggy bank can be a fun way to decorate their room with their favourite superhero, whilst introducing them to – and helping them to grasp – the concept of saving.
When they receive money, encourage them to set aside a portion of this money, and put it in the piggy bank.
2. Teach the Value of Money: It Should Be Earned, Not Given
Speaking of when children receive money, it’s essential for children to understand that money isn’t free.
Encourage them to earn their money through chores, part-time jobs, or other responsibilities that can help them to appreciate the value of hard work and the relationship between the time they put into it and the money they get out of it.
This approach not only teaches the link between effort and reward but also helps children understand the value of money and how to manage it. For example, consider two children: one who has learned this lesson and another who receives a “no questions asked” allowance each week. The second child is more likely to spend their entire allowance on sweets, while the first child – even if their initial impulses are the same – is more likely to manage their money wisely.
This paves the way towards making more informed, well thought out decisions, vs. thoughtless and impulsive spending.
3. Lead by Example: Be a Role Model for Good Financial Behaviour
Children are often compared to sponges, absorbing everything they observe. This is why demonstrating healthy and responsible financial behaviour is crucial – they’re likely to mimic what you do.
Where appropriate, discuss your financial choices openly. Explain why you chose to save for a future goal instead of spending on that item you liked in the shop window, or how you managed to avoid unnecessary debt.
By exposing children to your thought process and decision-making with money, you’re helping them to develop similar habits. Make sure they see you prioritising financial responsibility to positively influence their mindset.
4. Encourage Long-Term Thinking: Savings Targets, Trade Offs, and Opportunity Cost
As adults, “short-termism” is one of the most destructive behavioural traits. Many investing mistakes, poor financial decisions, or instances of wealth erosion can be traced back to someone making short-term choices without considering the bigger picture or the long-term implications.
Teaching your children to think long-term is one of the most valuable lessons you can impart. Start by helping them set specific goals—like saving for a new toy, video game, or an activity they enjoy. Having a meaningful goal will give them purpose and motivate them to save consistently.
This approach also introduces the concept of trade-offs, opportunity cost, and delayed gratification – a key aspect of financial responsibility. Learning to say no to something now in order to say yes to something more valuable later is a crucial lesson for children (as well as many adults!).
As your children grow older, you can introduce more significant goals, like holidays, a first car, or even university costs. This will encourage long term financial planning and set your children up for financial success in adulthood.
5. Introduce Budgeting: The Art of Managing Money
Budgeting is a fundamental skill that every financially competent adult must be capable of. Start by helping your children create a simple budget, linking it to the goals discussed earlier. Show them how to allocate money for different purposes, such as saving, spending, or even charity.
A common issue with budgeting among adults is that it can be perceived as boring or restrictive. Many people view a budget as a set of rules that prevent them from spending, so they avoid it. However, budgeting can actually be more enjoyable—and productive—when seen as a plan for how to spend your money, rather than a list of restrictions telling you not to spend it.
The purpose of budgeting is to maximise the use and enjoyment of your money, ensuring you spend on what truly matters to you. Introducing children to budgeting early can help prevent negative associations with it, fostering positive feelings instead. Since children typically spend 100% of their money on “fun” items, their early experiences with budgeting are positive and enjoyable – planning for new toys, new video games, or new football boots.
When more responsibilities come later in life, these healthy foundations make it easier to seamlessly incorporate things like phone bills and other expenses into their budgets.
This early practice will teach them the importance of living within their means, managing their money, and making well informed financial decisions.
6. Discuss the Importance of Giving: Instil Generosity
The importance of gifting is often overlooked.
But educating children about giving can teach a valuable lesson about compassion and empathy, and show children how money can be used as a tool for good.
As such, it’s a good idea to encourage children to occasionally set aside a small amount of money for charitable causes or to help others in need.
There are plenty of charities which children find engaging, such as animal shelters or charities dedicated to helping less fortunate children during festive periods.
7. Educate Children About Debt: The Dangers and Responsibilities
When your children first step into young adulthood, one of the first financial challenges (or temptations) they will face, is debt.
There are countless examples of young adults who get into trouble with debt, simply because they lacked financial literacy and did not learn the basics from their parents or the education system.
Going on lavish holidays paid for by debt, huge auto loans to drive luxury cars they can’t yet afford, or simply racking up huge credit card bills at the bar – we’ve seen it all.
Dubai can be a particularly unforgiving place for “debt traps”, where almost anyone who opens a bank account is immediately given a credit card with a $10,000+ limit – a dangerous tool for a financially irresponsible, excitable, young adult.
So as children grow older, it’s essential to educate them about debt – the potential pitfalls and the responsibilities that come along with borrowing money.
Explain to them how credit cards work, the concept of interest, and the potential issues that can arise when people cannot repay debt or start to accumulate debt.
Explain the differences between good debt (that helps to progress their lives and usually comes at cheap interest rates) like student loans or a mortgage, vs bad debt (that does not help to progress their lives and usually comes with very high interest rates), like high interest personal loans or credit card debt.
You should encourage your children to avoid borrowing money for unnecessary reasons and reinforce the idea of goal setting, saving, and delayed gratification.
8. Real World Application: Involve Them in Family Financial Decisions
The best learning experiences often come from putting theory into practice.
A great way to develop financially responsible children is to include them in age-appropriate financial decisions.
Whether it’s planning a family holiday, deciding on a major purchase (especially ones that children might be excited about, like a new car, or a bigger TV), or even simple things like shopping for groceries.
Discuss the trade-offs and compromises that are often necessary to stay within your budget and help them to understand how this interacts with your other financial or life goals.
Including them in the process helps them to understand the complexities of managing money and making sensible financial decisions, whilst also encouraging big picture, long term thinking, and how to stay on track with your other objectives.
9. Encourage Value Adding: Fostering Independence & Success
Finally, one of the most valuable lessons you can teach your children is how to identify problems, pain points, or opportunities and “add value.” This skill will benefit them throughout their lives, and it’s one that many adults struggle to master. If your children grasp this concept early, they are likely to grow into not just financially responsible adults, but financially thriving ones.
Encourage your children to think beyond simple tasks and to actively seek out ways they can create or add value, whether within your household or in the wider community. For example, consider a chore like emptying the dishwasher. While it’s helpful and might earn pocket money, it’s a task that would likely be done by someone else if the child didn’t do it.
Now, compare that to a child who sets up a lemonade stand after noticing a thirsty crowd gathering every Sunday morning at the local park. This child has identified a need that wouldn’t have been addressed without their initiative, and they’re likely to be rewarded more for it.
In the first scenario, the child is participating in a transaction, performing a task for a fixed amount of money (i.e. emptying the dishwasher for $1). In the second scenario, the child identifies a problem in the community and provides a solution, adding real value. In this case, there’s theoretically no limit to how much they could earn (i.e. selling lemonade to thirsty people, potentially earning far more than $1).
Fostering an entrepreneurial spirit in your children can teach them to think beyond transactional tasks, develop stronger analytical skills, engage more deeply with their activities, and apply themselves fully. Understanding how to create and add value is a skill shared by all high performers, giving a child who masters it a significant advantage as they enter adulthood.
Conclusion:
Expat life is attractive for many reasons, and a better lifestyle is often a major appeal. However, if you’re not careful, this environment can also be a perfect incubator for raising spoiled or entitled children.
Raising financially responsible children requires time, patience, and intentionality. By starting early, modelling good behaviour, and providing them with the tools and knowledge they need, parents can help their children to develop strong money habits and values that will serve them well throughout their lives.
In doing so, you will empower them to make informed and responsible financial decisions as they navigate adulthood, and set them up for a life of purpose and financial success.
By Technical Team @ Abacus
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