Parents, guardians need to teach their kids value of saving

19Sep 2016
Victor Karega
The Guardian
Parents, guardians need to teach their kids value of saving

ONE of the quickest ways to teach kids the value of money is to give them regular pocket money and help them open a junior banking account.

Giving your children the power to control their spending and track money going in and out of their accounts will help build healthy financial habits.

Teaching them banking language is important because the terminology and their meanings. Words like deposit, savings, balance, withdrawal, interest rate are often a whole new world to them.

In order to get kids or children on board, the product like ‘WAJIBU’ initiative introduced by the National Microfinance Bank Plc (NMB) has the capability of building the savings and money management skills of Tanzania’s youth from an early age with opportunities.

WAJIBU, which literally means ‘responsibility’, includes a suite of three savings accounts namely, NMB Mtoto Akaunti, NMB Chipukizi Akaunti and NMB Mwanachuo Akaunti.

They have been designed to serve youth at every stage of their lives and to help parents and youth conveniently save and manage money, independently or together, toward their goals.

It is paired with a financial capability designed to help youth and parents across Tanzania to save and manage money for a bright future.

“As a bank we believe that saving must start from an early age in order for youngsters to learn the importance of saving and at the same time continue with this trend when they become older.

Through this account we look forward to creating a generation of responsible and financially savvy future leaders in the country,” says NMB Managing Director, Ineke Bussemaker.

The bank aims at helping youngsters to make their money go further, whilst at the same time taking the hassle out of managing their finances and putting them in control of their spending while they are completing their studies.

She further notes that the bank’s accounts have been modelled to inculcate the habit of saving from an early age.

She maintains that one of the most effective ways of teaching kids about money is to open a savings account for them. Over the time kids can watch their savings grow, and learn a little about compounding interest along the way.

Thus, NMB Chipukizi Akaunti is unique and the first account of its kind to be introduced in Tanzania, allowing potential customers’ children aged from 13 to17 to manage their own accounts in their own names.

The accounts are paired with Jifunze, Jipange – WAJIBIKA (Learn, Get Organized – Be Responsible).

It also allows for products to be added as your child’s financial sophistication grows.

Giving your children the power to control their spending and track money going in and out of their accounts will help build healthy financial habits. This will help them differentiate between a ‘want’ and a ‘need’ at the end of the day.

It is imperative for NMB to always give its esteemed customers the best service by providing them with tailor-made and innovative products. This includes its children, as they will also become the bank’s future clients.

This is a bond the bank cherishes and an unshakable trust it shares with its customers over the years, notes Bussemaker.

“Increasing the financial access and capability of youth helps NMB to fulfil its mission to build a savings culture in Tanzania. Not only that investing in and retaining financially capable youth from a young age makes business sense.”

According to her, WAJIBU is an opportunity for NMB staff to make a meaningful contribution to their community, while also helping the bank reach a new market of savers.

In this case, parents or guardians are regarded as primary account holders with responsibility for jointly running such accounts until their children become adults and can solely operate their own accounts

For her part, director of product development at Women’s World Banking, Jennifer McDonald says that social aspect of children’s banking cannot be underestimated.

Taking a child into the bank with you to learn the deposit or withdrawal process with a teller helps them experience the reality and perhaps more than sending them their pocket money electronically.

“We understand that education is the bedrock of development for the economy. Everything is dependent on knowledge and skills, which the WAJIBU initiative has been specially designed to meet.

It will also help parents and guardians to meet the specific needs of their children and young adults,” she urges.

McDonald notes that three savings accounts provide students in primary and secondary schools, as well as those who are in universities and colleges with access to formal banking services and hence become independent and able to access economic opportunities in the long term.

Minister for Education, Science, Technology and Vocational Training Prof. Joyce Ndalichako noted that financial education embraced real asset in a saving account as it encourages young people to learn about how to manage their money well.

“Competent, confident and engaged consumers who make sound financial decisions will not only be improving their own lives but also a society as a whole. I am very proud that the WAJIBU initiative is an investment opportunity for the youth for them to thrive,” she noted.

According to her, the government has ongoing campaigns of improving the financial literacy levels for all, particularly the majority members of the community.

Prof. Ndalichako further underscores that the provision of a large, lamp-sum of cash to a child upon entering adulthood is meant to help level the playing field, giving young adults the option to overcome early financial hurdles.

Providing an initial sum for kids at the beginning of their adult life, without considering their parents’ financial status will expand the range of options before them, such as education, opening business or professional training, says the Minister.

Savings culture in Tanzania

According to the Bank of Tanzania (BoT) only 13 per cent of Tanzanians own bank accounts. The figure is an indication that Tanzanians have not yet realised the importance of the culture of savings.

Experts say depositing money into a savings account is safer than keeping it at home in mattresses.