There exists a dichotomy online when it comes to becoming financially literate. As soon as you type out the keywords “investing early”, social media feed or search engine is bound to throw over two bones.

The first is the tempting kind, often attracting immediate clicks with phrases like “invest as little as $1 today” or “this is what $1 will become in X number of years.” 

The second demands an initial store of wealth to build wealth, offering tips and hacks for anyone with a “millionaire mindset” (and bank balance). 

This perplexing hurdle singlehandedly deters young people starting their first job from saving. In the UAE, 43% of youths have stopped taking the first step towards building their wealth.

HOW INVESTMENTS EVOLVED 

The pace and diversity of technological innovation play an integral role in shaping how young people transact and invest their money. Obediah Ayton, Director at Dhabi Holding Co. and Chairman at the Family Office Summit, observed a characteristic shift in investment portfolios boasted by digital natives when compared to their traditional counterparts that precede them. “For Gen Z and millennials, it’s about owning assets through platforms like Airbnb or investing in tech stocks via apps like Wio,” says Ayton.

For a generation that demands instant engagement, Ayton believes gamification on digital platforms could boost financial awareness among younger demographics in the UAE. “It allows them [students] to fail without real-world consequences and learn from their mistakes,” he adds.. “Imagine an app that allows you to compete with your classmates with fantasy currency and invest in the stock market.” A digital initiative of this nature could be easily scaled and used to inculcate key learnings about long-term investments and short-term gains among prospective investors in the future. 

Given the abundance of financial knowledge, advice, and news on social media, Vijay Valecha, Chief Investment Officer at Century Financial, emphasized the impact of financial influencers and content in “bridging the gap between complex investing concepts.” 

But caution where it is due.. Marilyn Lydia Pinto, founder of KFI Global, cautions parents and the youth about clickbait financial advice on social media. “There’s a lot of cookie-cutter financial advice on social media that lacks the depth needed for real financial decision-making.”.Though accessible, financial dos and don’ts must be supplemented with a “solid understanding of personal finance.” 

For a financial strategy to be effective, it needs to be personalized and especially curated, according to Pinto. Personal finance requires depth and nuance–- “both of which are absent on social media,” Pinto adds. 

Pinto emphasized the importance of educating “the youth on identifying and staying away from suspicious content that could lead to a financial fallout” as part of financial literacy curricula. By understanding key concepts like “risk, reward, debt and due diligence”, young people hone their “radar for potential frauds and scams,” Pinto adds. 

HOW PARENTS CAN FOSTER FINANCIAL LITERACY  

Experts suggest that parents should instill financial discipline in their children early. Pinto highlighted that the key to teaching investing is ensuring children understand personal finance, such as saving, budgeting, and evaluating risk. “You can’t build a house on an unstable foundation,” she says, stressing the importance of teaching foundational financial concepts before introducing investment topics.

Valecha recommends that parents take small steps to introduce financial concepts, such as involving children in simple financial tasks like budgeting for small purchases with a weekly allowance. “The earlier you start, the better,” Valecha says. “For younger children, parents can gamify basic concepts like earning, saving, and spending before moving on to more complex concepts like investing.”

Involving children in real financial decisions can also be a valuable learning experience, according to Ayton. By allowing children to participate in family financial discussions, parents can help them internalize these important lessons, building their confidence in managing their own money in the future.

WEALTH BUILDING FOR THE NEXT GENERATION

Parents represent the bridge between clickbaity financial advice and navigating one’s personal finances in a silo. By investing in long-term investments, parents create an advantageous launch pad for the next generation. 

Given the UAE’s upward infrastructure trajectory, Ayton suggests real estate as a sound choice. “It’s a long-term investment that will continue to grow.”

“With digital platforms making investing more accessible, people can now invest with as little as a dollar in stocks, IPOs, and even cryptocurrency,” adds Valecha. For young investors, he recommends combining modern investment tools and government initiatives to build wealth.

CULTIVATING A FINANCIALLY LITERATE YOUTH

Initiatives such as the financial literacy program launched by National Bonds in 2022 in the UAE, which targeted over 300,000 high school and university students, offered curated financial consulting, mentorship, and on-the-job training, helping students build foundational financial skills and preparing them for their future financial journeys. In 2024, National Bonds further expanded its efforts with The Young Investor program, aiming to introduce financial knowledge to students as young as 10, covering topics like money management, savings, and investments.

“Programs like these are essential in laying the groundwork for future generations to be financially independent and responsible,” says Valecha. “The UAE has some of the most successful family businesses in the world today, where they created billions on top of the dry orange sand,” Ayton says. To supercharge financial literacy initiatives, he recommends sharing this entrepreneurial wisdom with the larger community by “educating the next generation on how to invest money.”

CARVING A FINANCIALLY LITERATE FUTURE

Building a financially literate youth is no longer a policy-driven feat. As discourses on finance freedom and varied asset classes continue to brew online, it is crucial to cultivate the ability to discern and question. 

The region’s status as a booming billionaire destination, coupled with its encouraging risk appetite, forms a fertile breeding ground for its youth to experiment with dynamic asset classes for as little as $10. This exposure exponentially equips the next generation to expand their monetary horizons in a measured manner. 

By aligning modern tools with traditional values and forward-thinking policies, the next generation will thrive financially.