Why young people need to start saving early

As part of the Global Money Week (GMW) campaign, that takes place in March every year, KCB Rwanda last week hosted a group of students from Lycee de Kigali to educate them about financial education and financial inclusion. GMW seeks to inspire children and youth to “learn about money, saving, creating livelihoods, gaining employment and becoming an entrepreneur”. It’s a noble cause that should be embraced by all. The issue of saving is an important one for particularly developing countries like Rwanda. While savings account for 40-50 per cent of the Gross Domestic Product in developed countries, it averages only between 10 and 15 per cent in Africa. This is largely down to a lack of strong savings culture in this part of the world. Saving helps you to build capital for future investment, which allows you to get income and attain personal financial goals, a successful livelihood, and financial freedom in the future. However, thanks to a lack of savings culture, by the time Rwandans start to save it’s often too late to accumulate savings that can have a meaningful impact on their lives and family. The Government last year announced plans to nearly double the country’s savings in less than three years, from 10.2 per cent of GDP as of October 2017 to 20 per cent by 2020. This is a commendable target but it needs close follow-up all the way through to achieve it. There is need for all stakeholders to play a role. From government and financial institutions to schools and parents, everyone has an important part to play in this effort. Indeed, it is through saving by citizens from early on in life that the country will be able to have long-term capital for investments. Children and youth should understand that they do not need to wait until they start to earn a regular or periodic income to start saving. The whole idea is to learn to deny yourself something today to create the foundation for capital in the future. And it does not matter how much you save. Even pocket money or small monetary gifts can be saved. What matters is how long you do it. A savings culture needs to be part of the values that we teach our children as they grow up. The education sector needs to revisit the curricular to ensure that matters of savings, money and business are given due attention across the learning ecosystem. Banks too need to continue promoting this culture and devising and popularising various products tailored to encourage young people to start saving early. And, in the advent of digital banking, saving has never been easier. Technology has helped address some of the inconveniences that came with traditional banking ways. Today, you can open a bank account and deposit money on your mobile phone from the comfort of your home. All people need is to start saving. Right now.

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Why young people need to start saving early