Children and youth represent one-third of the world’s population. The trend is the same in the Philippines because, as of 2022, one-third of the country’s population is comprised of kids below 12 years old. Despite their numbers, many children are not financially literate. Apart from receiving an allowance for school, there is not much understanding of managing money. Financial inclusion for kids has become the parents’ responsibility.
Why Is There a Need to Increase Financial Inclusion for Kids
Despite their large number, with some of them receiving money as allowance or as stipends for work done, children are 33% less likely to have a savings account than adults. Meanwhile, 44% are less likely to save in a formal institution even though they might have some cash stashed in piggy banks at home. (Source link)
According to the same report, the savings account penetration rates for children vary by geographical region. “As of February 2022, 31.8 percent of surveyed (adult) Filipinos stated that they have an account with a financial institution,” and the larger majority remain unbanked. If the parents do not have their own bank accounts, then it is most likely that their children do not have formal savings accounts, too.
There is no data about this, but if the parents are not privy to financial matters, then it is safe to say that their children are not financially literate as well. For this reason, the youth are often excluded from access to formal financial services.
With all these untapped resources that the youth offers, there is a real need to increase financial inclusion for kids in the modern setting.
Simple Financial Concepts
Depending on the child’s age, he or she may already be introduced to simple financial concepts. To help parents explain these facts to kids, there are free educational videos online dedicated to discussing financial literacy for kids.
What is money
Foremost, children should know what is money, where it comes from, and what it is used for.
Kids should then understand that money is not just something that they receive from their parents. Mommy and Daddy are not the real sources of money–they work hard in order to get paid wages or earn profits from their businesses or investments. With the knowledge of how money is earned, kids will hopefully become more understanding and considerate about asking for things from their parents.
Necessities vs. Wants
Parents can easily explain the concept of needs and “wants”. Needs are things that are necessary for survival and decent living. The basic needs of man are food, shelter, and clothing. Meanwhile, education is necessary so that children can learn knowledge in order to prepare them for life.
This is where PRUDENCE comes in. When it comes to the family budget, it is best to involve the children so that they, too, can start thinking and considering these matters. Involving them in the decision-making about family purchases will exercise their brain functions and enable them to weigh the pros and cons of each purchase. It is also training them for the future when faced with choices on how to use their earnings.
A short trip around a business center in your city can help your kids visualize the flow of money. Point out the centers of business as well as banks to them. Tell them about the functions and services of a bank.
A Savings Account
Bring their exposure further by opening a bank account for them. As a young kid, it feels different to see your name printed on an official-looking document and to be able to see how the money adds up in the passbook.
Watch: Video on Financial Inclusion for Kids
Our children have been exposed to business and money management at an early age.
It All Starts in the Home
As parents, we all know that financial literacy is not being taught in school so it is up to us to take the initiative to educate our children. We should practice financial inclusion for kids in our everyday lives.
The teachings need not be complicated, especially if you are not privy to economic concepts, but a simple online search can certainly point you in the right direction. You just have to be intentional about it.
Better yet, why not learn together with your child?
The BDO Junior Savers Savings Account
We are glad that BDO has a product called the Junior Savers Savings Account that’s designed for kids. It only requires P500 to open an account and the child gets a passbook so that he or she can monitor her account.
When Shane was younger, we informed her that we will open a savings account for her. She went with us to the bank to help fill up the forms and submit the necessary documents. Shane would then dutifully save up money gifts and her earnings from her sales and put them in a box. After she has collected some amount, we would go to the bank and deposit it.
But bank trips were halted during the pandemic. She only recently went back to the BDO-Bacolod Hilado Branch, which is now equipped with the appointment scheduling machine. Even for her first time, the tech-savvy Shane keyed in the details of her transaction, got her appointment slip, and then sat down to wait for her number to be called. She even brought a novel to read in order to keep her entertained while waiting. Proud mommy moment that I wish could have captured! She looked so poised and confident at the bank.
Enrolling the BDO Junior Savers Account
Another advantage of the BDO Junior Savers Account for me is the fact that I have a BDO Savings Account. I enrolled Shane’s number in my account, which makes it easy for me to transfer money to her, like when she has some gifts from relatives or from companies for her modeling. Since I am her co-accountholder for her Junior Savers, I also get to monitor her account activity from my phone in real time. It’s very easy to manage our bank accounts from there.
- Open a BDO Junior Savers Account: https://www.bdo.com.ph/personal/accounts/savings/peso-savings/junior-savers