Across the African continent, several countries are increasingly turning their attention to the need to mobilise domestic resources for economic transformation, infrastructure development, achieve fiscal stability and reduce reliance on external financing.
However, the continent still suffers from chronic low savings rates compared to other continents, especially European countries. Although attributed to a combination of social, political and economic factors, low savings in most African countries are primarily attributed to financial illiteracy.
According to a 2021 report by EFG Hermes, Kenya's savings rate - calculated as the difference between income and consumption, expressed as a per cent of GDP, was at 13 per cent, which is way below Africa's average of 17 per cent. By contrast, neighbouring Uganda and Tanzania have already crossed the 20 per cent mark even though their per capita income is significantly lower.
Today, more than ever, financial education is a core life skill as more households are living from pay check-to-pay check. Loosely defined as the ability to understand and apply different financial skills effectively, including personal financial management, budgeting and saving, financial literacy makes individuals self-sufficient.
Kenya's poor saving culture is attributed to high spending power, especially by young people who follow international trends closely.
Achieving financial well-being is more than how much money you make or whether you know how to invest in the stock market. It is about being able to make informed money choices that prioritise your needs and acknowledge delayed gratification.
Many Kenyans are unprepared to deal with rapid changes in the financial landscape. This is at a time when credit products such as mobile loans, credit cards and even log-book loans, many of which carry high-interest rates and complex terms, are becoming more readily available.
Given these risks, we must take individual responsibility to safeguard our financial situations, especially our children's, from predatory financial practices and most importantly, impact financial knowledge from a tender age.
Unfortunately, most parents need to do more to expose their children to money matters. While this stems from how most households raise their children, it's time for a mind shift. We must involve them in day-to-day money matters, like managing household expenses, to help open their minds to certain financial aspects.
Unlike the past decades, the current generation of children is growing up in an increasingly complex world. They not only have easy access to more resources but also multiple competing priorities. A solid foundation of financial education built around good money values can help them transition into financially responsible adults as they grow.
Kenya has yet to make strides in mainstreaming financial literacy in the curriculum. Therefore, our homesteads must be the primary place for imparting financial literacy. All we have to do is build a strong foundation by giving our children a perspective and building habits on money management.
Although there is plenty of information available online for children to learn about saving, planning, budgeting, and investment options, they still need proper guidance to develop financial acumen and understand how they should value money and use it efficiently.
Children learn and develop these traits through their experiences, role modelling and relationships; they are not born with the information, skills, or behaviours contributing to adult financial well-being.
As we mark Global Money Week, we must make deliberate efforts to inculcate the basics of finance in our children before they go out into the world. These habits and skills will help them to make sound financial decisions throughout their lives in a sustainable manner.
The writer is the KCB Bank Kenya Acting Managing Director