> Posted by Sonja E. Kelly
I remember my first bank account. I stood up on a stool and dumped out my piggy bank’s worth of change at the teller window to be counted. It was an account that came with photos of a clown on the ledger and a sucker each time I made a deposit. Now it’s 20 years later, and while I have changed I still haven’t moved my original funds. They’ve been transferred to a national bank through a series of mergers, and I have connected a checking account and credit cards to it, but I like to think those pennies and quarters are still being put to use in my bank.
I don’t think I am alone in being grateful for entering the formal financial system at a young age. It’s important to start smart financial habits with youth. Consider the following figures about Americans (originally compiled in the Financial Services Roundtable “Fast Facts”):
- 41 percent of U.S. adults grade their knowledge of personal finance as a C, D, or F.
- Many young adults don’t feel that they are adequately prepared to make good financial choices when it comes to using debt wisely (28 percent), saving for the future (40 percent), or investing their money (43 percent).
- 44 percent of parents report that they need more guidance in order to teach their children the necessary skills to become financially responsible and successful adults.
- The majority (52 percent) of young adults between the ages of 23 and 28 name the most important issue in the lives of individual Americans to be “making better choices about managing money.”
- Nearly half of teens do not know how to effectively use a credit card, but 24 percent of them think they should have a credit card either in high school or before.
- In 2011, the percentage of teens who used a savings account, checking account, debit card, or credit card amounted to 73 percent, compared to 66 percent only two years earlier.
Everyone knows that children pick up on things faster than adults. But, beyond the initial skills that we teach, targeting financial education to youth can have an effect on a lifetime of financial habits. In my view, equipping children and teens with the tools they need to succeed with financial services is essential to financial inclusion. Not only is it easier to learn something when you are young, but financial inclusion for youth has the potential to increase consumer protection and financial capability in the long run.
For more information, sign up for updates from the Financial Inclusion 2020 campaign.
Image credit: Johanna Hardell
Have You Read?
Youth and Financial Inclusion: A Head Start to Financial Citizenship
Youth and Financial Inclusion: How Can We Give Them a Head Start?
Bhagwan Chowdhry Explains Financial Access at Birth (FAB) on Fox News
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June 25, 2012 at 10:49 am
John Gitau
Sonja,
you are right in the need to include youth at early age as a way of building long term capability. Fortunately for the youth with their strong reactivity( and pro-activity as well), it is easier to design financial literacy programs around what they like and resonate with. In Kenya, the very first attempt to target the youth with financial literacy messages was done by Mediae, a Film production company commissioned by FSD Kenya in 2008. Mediae came up with a local TV drama known as “Makutano Junction” popular because of its theme and easy flow of language. Since then, most banks are advertising their products using the local slang “sheng” a mixture of English and Kiswahili the national language. The target is the youth. Though data is not conclusive, FSD Kenya estimates that Makutano Junction was able to reach over 2 million youth with financial education messages, thus increasing the knowledge element. With bank’s rallying calls to partake financial services alongside saving, earning, investing and budgeting, the orchestrated efforts will yield positive inclusive results leading to capability. Local TV stations run programs suitable for the youth and if such are infiltrated with financial education themes, that can help accelerate knowledge.
On the other hand, rather than spend resources on parents in financial education in order to teach their children, such resources can be used on the youth in a more focused way as they represent faster learning and dynamism in financial products use. By the time parents, if already financially illiterate, appreciate literacy to practical level of teaching their children, the children will already be adults and equally financially illiterate( on a lighter note).
Right now, banks in Kenya are promoting savings( funding their treasuries) but they are doing it with so much drama and fun fair in their advertisements that leave viewer entertained. Indirectly, savings as a financial education theme become pronounced and repeated, will become part of thinking and practice. Investing is a common buzz word for real estate developers advertising property with banks falling over themselves with equal adverts on financing(debt). All these activities which do take place in other countries are not necessarily financial education by intention but by default. With M-pesa having set the stage for inclusion, I see Kenya leading Africa in the financial inclusion agenda.