As an Initiative to promote Financial responsibility
Due to the increasing importance of financial awareness, the UAE Banks Federation (UBF), continues its efforts to develop and raise financial awareness of consumers. Being an essential element of stability and economic growth, financial knowledge helps individuals not just to have access to financial services but also to take prudent and responsible decisions when it comes to their financial transactions.
While a lack of financial knowledge may lead to financial distress, a comprehensive understanding of financial products and concepts becomes imperative as will empower individuals to make responsible decisions on saving, spending, investment, and achieve economic efficiency by way of balancing costs of borrowing against benefits.
As a result of its realization of the importance of financial education, which is considered as one of the key pillars of financial inclusion in order to achieve sustainable development, UBF has announced the release of a full comprehensive handbook, titled ‘Financial Literacy for Individuals' order to provide a strong structure for planning and managing personal finances. The handbook offers individuals all basics required to make efficient and coherent financial decisions based on four different aspects such as planning, borrowing, saving, and investing.
Highlighting the continuous efforts of banks in the UAE in line with the government’s vision of fostering financial literacy, HE Abdul Aziz Al Ghurair, Chairman of UAE Banks Federation, said: “We have decided to launch this initiative in line with our objective to promote financial literacy in UAE, and in order to emphasize the significance of financial knowledge and its role in enhancing financial inclusion of individuals.
HE added: “The term financial literacy refers to the ability to use basic knowledge and skills to make prudent and responsible financial decisions. Closely aligned with this, we aim to employ this handbook to further develop the skills of consumers by providing information and guidelines, which enable them to make wise decisions on their financial transactions which in turn help them reach financial independence and reduce the possibilities of financial trouble. Moreover, it elaborates on how financial planning and management will affect positively or negatively on their financial future. We hope that the handbook will contribute effectively towards building a comprehensive financial education ecosystem in order to empower individuals for taking healthy and safe financial decisions, which will benefit the society and economy.”
Focusing on enhancing financial knowledge, the handbook emphasis how a lack of financial knowledge can lead to poorly informed decisions, which in turn can result in mishandling of savings, as well as falling into debt with inability to repay. Also, the handbook stresses on the importance of financial planning as it provides directions that help individuals to develop plans that match their current and future financial needs and the required steps to simplify financial activities. It also sheds light on the important benefits that financial planning offers to individuals. The handbook also provides valuable information about different types and operations of banks as well as the institutions that regulates them, in addition to their contribution to the economic development and national financial stability. Additionally, the handbook offers a general glimpse of different financial products and services that banks offer and how customers can benefit from them.
Furthermore, the handbook shines a light on the importance of budgeting and the steps required in creating a budget, which helps in achieving a balance between income and expenditure. In addition, it offers an overview of different components and benefits of savings, as well as various types of savings products, such as recurring-deposit savings accounts, investment-linked savings accounts, fixed-deposit savings accounts, family savings accounts and gold investment accounts.
Additionally, the handbook highlights the benefits of investment, including financial security, wealth generation, financial preparedness for emergencies, as well as accomplishment of financial objectives. It also introduces the key investment products such as stocks, bonds and mutual funds.
Banking and financial experts have often noted that consumer debt has been piling up, resulting primarily from a lack of financial knowledge.The ‘Financial Literacy for Individuals’ handbook highlights various aspects of borrowing, saving and the ways to manage debt efficiently. It also specifies the different types of loans available for consumers and steps to follow while borrowing. Further, the handbook attempts to guide consumers in prioritizing paying off debt and savings to help them avoid additional burdens and achieve a lifetime of financial well-being.
The handbook also sheds light on the importance of taking necessary measures to prevent financial crimes, providing a list of common and potential frauds, important information about the types of financial fraud to which individuals may be exposed and a number of important tips to avoid becoming victims of cybercrime and repeated fraudulent attempts.