How early savings culture can help create a better future for children
For many parents and guardians, rather than directing their effort towards saving money for their children, it is considered more important to control their access to money at such age in order to reduce the urge to buy virtually everything they see, thereby encouraging compulsive spending.
However, there is a lot more to be gained by letting young people understand the value of money and the importance of proper money management.
Three years ago, a study by the University of Cambridge revealed that children begin to form their money habits at the age of seven through imitation and inductive learning.
At such a young age, the children acquire knowledge as they interact with their environment, trying to make meaning from observing dynamic interactions between people, objects and their brains.
Children have an intrinsic desire to understand their environment, to be in active control of their own experiences and to make relationships with others leading to an understanding about the causes and effects of things around them.
Hence, giving children a good foundation and teaching them about money is critical for their personal and financial development, especially with budgeting, saving and building a healthy money habits.
Youthful savers who often seem to have more self- restraint, have some sense of future possibility worth planning for, and tend to have a capacity for delayed gratification and judgment that unwise spenders often seem to lack.
In building a sustainable savings culture, it is vital to let the child develop a sense of reasoning, sometimes with gentle prodding from the parents.
Teaching them these rudimentary skills for money management, which is that it is never enough to buy all you want, so the child must exercise judgment and learn to be selective.
By saving efficiently, the child also has a strong opportunity to meet the challenges of adulthood, growing up with an innate understanding of the value of money through real life situations and applying their learning in using money that has been saved.
Although children from 0 to 17 years old cannot open a savings account without an adult serving as an account holder, the child also bears a sense of responsibility upon acquiring knowledge that such an account exists.
The importance of parents and guardians inculcating good savings habit in their wards cannot be overstated. To encourage them in doing this, Access Bank Plc, Nigeria’s largest retail bank introduced the Early Savers Account, a savings account for children below the age of 16 years including unborn children.
The account can be opened in trust for a child by the parent or guardian who will be the primary account holder until their child attains adulthood and can solely operate their own accounts or possibly move to other age appropriate product.
Going a step further, Access Bank celebrated World Savings Day with children in the six geo-political zones, educating them on the importance of building an early savings culture and improving their future through financial independence.
The essence of the World Savings Day, which was celebrated by financial institutions and other related organisations on Thursday, 31 October, 2019, is to increase public awareness on the importance of savings both for households and for the national economy.
Also, this encompasses the Central Bank of Nigeria (CBN) initiative to bridge financial literacy and inclusion particularly for children in to them why they need to save money.
It is crucial that we embed in them, the ideals of hard work, earning ones’ living and saving part of their income for the future. This should be done at an early age. It is also important to instil in the child’s psyche, the notion that ‘money doesn’t grow on trees’; rather, it must be earned.
Teaching the basics of money management can assist children in developing good financial habits that will benefit them for the rest of their lives.
The CBN has set an outlandish goal of achieving 80 percent financial inclusion by year 2020 and encouraging early savings culture is one way to achieve this. Savings are the backbone of investment and economists have proven that the rate of savings in the economy directly influences the rate of investment.
In simple terms, for the Nigerian economy to grow, we need to grow the national savings base from the current low levels. If we all teach our children to save, we may just be saving the future of our country.