In today’s fast-paced world, a lot of people, particularly the youth, lack a need to save money for the unforeseeable future. Instead, they opt to spend their money on what they are sure of – today.
The need for saving, however, cannot be emphasised enough, especially in a country like ours where savings are vital to cushion us from high levels of dependency and for economic growth.
Cultivating financial discipline among Kenyans starts with entrenching a savings culture among the youth. Financial literacy at a young age is fundamental as it offers a foundational step towards building a positive relationship with money. This is however lacking amongst Kenyans who, according to a 2021 report by EFG Hermes, love to live life on the fast lane with little care for tomorrow.
There is a general love to be trendy amongst the youth, who account for about 75 per cent of the population. The Fear of Missing Out (FOMO) degenerates any need to save as they thrill in living for the moment.
This has placed Kenya’s saving rate at 12 per cent, way below the Africa average of 17 per cent – pitting it against Uganda and Tanzania, which have surpassed the 20 per cent mark though their per capita income is lower than Kenya’s. Both countries’ saving rate stands at 26 per cent of their Gross Domestic Product, signalling a better saving culture than ours.
This is further exacerbated by the mantra we all know the youth to live by – Yolo (You Only Live Once) – thus forfeiting the need to save for ‘rainy days’ forgetting that saving plays a key role in building financial fortress and resilience around oneself as well as preparing for difficult days in the future.
Recent calls by President William Ruto encouraging investment and saving could not have come at a better time. However, there exists a general scepticism amongst people that nudges them to only invest and save with financial organisations that have traditionally been considered trustworthy.
This limits the savings and investment options for the up-and-coming generation and calls for sensitisation on the myriad options available for the Kenyan youths to save their money, either for future projects or retirement.
Granted, everyone has their own financial goals based on individual priorities and needs. Financial well-being, therefore, cannot be pegged on how much money one makes rather the consciousness on their expenditure. Financial well-being can be achieved through making informed decisions by planning for our money and making sacrifices that delay our gratification.
Unlike in the past, today, there is a profusion of literacy financial tools that anyone can use to improve their mastery on matters finance, investments, credit, pension and saving. Such tools include listening to podcasts and subscribing to financial newsletters and magazines, consulting a financial coach, or reading financial books that provide an abundance of information on savings and investment.
Arguably, Kenya’s poor saving culture stems from factors such as poverty and inadequate financial education, which has limited many Kenyans from building up their savings over time.
With the existing tough economic times, many individuals and households are living hand to mouth, which makes saving inconsequential. This, however, does not take away the importance of saving and the difference it makes to an individual’s well-being in the future.
World Savings Day, observed annually on October 31, provides an excellent platform for fiscal industry stakeholders to intensify public education on financial literacy. This year’s World Savings Day is aptly themed ‘Conquer your Tomorrow’, which reinforces the call to action for the younger generation to save and plan their finances for financial freedom in the future.
In keeping with this year’s theme, the government and key players in the public and private sectors can make a difference through bridging the financial literacy gap and providing financial incentives to the youth to encourage a saving culture.
Awareness campaigns to sensitise the masses on financial literacy will be vital in nurturing a saving culture among young people at an earlier stage of their development. Efforts should also be channelled towards introducing financial education programmes in schools at an early age to instil financial concepts and skills in the young minds.
Further, the youth are known to be avid users of social media and other digital platforms. These platforms are instrumental for both the government and private sector to leverage on to reach the young generation with financial literacy material and information.
Young people can also learn about personal finance through sponsored financial literacy competitions that can be organised at both the county and national levels, which include debates, quizzes and essay writing competitions. This form of engagement has existed for other topics on social, religious, political and science issues.
Key players can also provide apprenticeship opportunities for young people who are interested in finance and business for exposure to real-world financial situations that will teach them valuable skills to manage money.
These collaborative efforts hold a key role in changing the attitudes of the youth towards money, thus, fostering a generation that can secure their financial future while contributing to the overall performance of the economy in our country.
Managing director of Postbank Kenya
