Why it’s crucial to teach youth the value of savings
As the world continues to face multiple challenges that have economic implications, actors in the global financial system have been called upon to enhance financial inclusion as a means of mitigating the socio-economic impacts of Covid-19.
Insecure livelihoods and lifestyles brought about by the pandemic have necessitated deliberate savings and investments in long-term projects; hence, financial resilience has become an indispensable element of post-pandemic recovery, especially among young people.
In Kenya, savings cultures and attitudes towards money have been far from robust and tend to be much influenced by political events, economic cycles and other external factors, over and above the disruptions occasioned by Covid pandemic.
The youth aged 35 years and below are more often than not among the hardest hit by financial challenges such as unemployment and lack of investments. Some of these conditions open up opportunities for predatory lenders and other risky behaviours such as gambling. As such, players in the financial sector across the globe continually develop programmes and campaigns targeting the youth in effort to enhance their financial literacy.
One such programme is the Global Money Week marked annually in March. This year’s Global Money Week theme is, “Plan your money, plant your future” - an allusion to the need to put sustainable finance at the heart of our decisions. This is critical today, especially, among young people who are driven by immediate consumption patterns and are, therefore, increasingly faced with indebtedness. This year’s celebrations call for an introspective look at how we manage our incomes and expenses today, with clarity on how such actions might affect our tomorrow. This situation is amply discussed in an EFG Hermes report that shines a spotlight on this demographic as a contributing factor to Kenya’s poor saving culture rated at 12 per cent, way below Africa’s average of 17 per cent. The report notes that most young people tend to copy expensive lifestyles in the West and hence high spending power. This has led to a situation where most young Kenyans have limited opportunities to save money and make investments for their future. For a population that is at the centre of the country’s transformation in achieving socio-economic development, it spells bad news considering that they are supposed to be key actors in driving economic growth.
The situation is dire for youth specific groups such as women, persons with disabilities and those from low-income backgrounds who face more barriers when trying to access information on how to make good savings. It is critical that we accelerate the process of learning and acquiring financial skills from a young age, to secure our individual futures and contribute to a stable future for our country. Research suggests that young children value money more when they learn how to save it. In countries like Australia and New Zealand where compulsory financial education has been part of the curriculum for several years, savings rates among children and young people have increased.
The goal of raising awareness among children and youth about sustainable finance aligns with our organisation’s aspirations of encouraging parents to embrace open communication with their children on money matters. Through tailor made savings accounts such as the Postbank Smata Account, we encourage young people to develop a savings habit, learn how to manage their finances, and ultimately achieve their financial goals. The account is specifically tailored for 0-18-year-olds where the parent/guardian operates the account for the minor (0-11 years) before handing over responsibility to them. We recognise the critical role financial literacy plays in shaping the financial well-being of future generations and believe that parents/guardians have an important role to play in this process.
— The writer, Raphael Lekolool, is the Managing Director, Postbank