IF anyone opens up a restaurant in one of the busy corners of the metro cities in Bangladesh, he or she may expect to make a hefty amount of profit. There are two underlying reasons for that. Firstly, young people of our country are used to enjoying foods outside and secondly, in general, youths of our country are much more interested in consumption rather than in savings. There is no doubt that young people, particularly students, have limited or no income sources of their own. Still, when it comes to a choice between immediate consumption in restaurants and saving money for future, most of them will choose the former.
It is crucial for young people to realise that callousness to manage little expenses may cause huge damage just like a small leak in big boats can ruin everything. If students do not instil savings habit from early days, they are inclined to fall into credit trap in later part of their life. The habits which are formed during student life are unlikely to change in professional stage.
We all know that Sustainable Development Goals (SDGs) appear to be ambitious targets which Bangladesh is trying to achieve. Financial literacy is directly linked with sustainable financial sector. Beyond shadow of a doubt, it is an essential life-skill which helps youths to protect basic human right. Those who are financially literate perform better on controlling unnecessary expenditures and thus they can save more money than anyone else. The developed nations are a perfect example of the involvement of youths to gain financial literacy. In developed nations like Australia and New Zealand, banks are offering programmes on finance to educate youths and children. They are sponsoring Financial Basics Foundation, a registered charity of Australia. 'Teach children to save South Africa' is another programme of the Banking Association of South Africa to promote savings of South Africa. Even in Germany, employers of Deutsche Bank educate people voluntarily on shaping the mindset on savings through the wide branch networks. To promote savings in developing nations, UN Capital Development Fund and The United Nations Children's Fund are working along with some NGOs to promote savings among youths with a view to increasing financial literacy.
The idea of taking care of personal finance among students is still at nascent stage in Bangladesh. Back in November 2010, Bangladesh Bank asked all banks to open school banking branches. Eastern Bank Limited (EBL) was the first to come up with such facilities. The bank introduced 'EBL Junior' aiming to include young population under the umbrella of banking. According to Bangladesh Bank (BB) data, at the end of 2016 more than ten billion crore taka was deposited with school banking accounts at commercial banks. In 2016, the total number of school bank accounts in urban areas was 0.78 million compared to 0.47 million in rural areas. Usually, banks offer one per cent more interest than they offer on other savings accounts.
Youths are the future depositors. For that the youth must get proper education on finance and these financial services are helping young people to get that. In today's economy, saving money is harder than ever before. The earlier the young people form savings habit, the higher chance they will enjoy financial stability after or even during student life. Here are a few explanations why a student should build a savings mindset:
- Remembering why saving is crucial: Students in Bangladesh need to remember that savings in little can help them gain financial freedom in the long run.
- Balancing income versus expenditure: Irrespective of the amount of raise, a young person in particular should not raise expenditure level if he or is already satisfied with existing standard of living. The focus should be on the long term rewards from a highly disciplined money saving mindset.
- Separation of needs from wants: The youth need to focus on fulfilling needs, not wants. Warren Buffet, one of the richest person in the world, said, 'If you buy things you don't need, soon you'll have to sell things you need.'
- Adopting learning mindset for lifetime: Books, online courses, seminars, and symposiums can help students gain financial literacy and the learning process should continue as long as one lives.
- Development of a growth mindset: The youths, particularly students, are in the growth stage of life. They need to understand that saving money even by a little can unlock opportunities in later stage of life.
A penny saved is a penny earned, we all know that. If youths of Bangladesh are not interested in saving money, more unnecessary consumption will follow in place of proper investment. We need to understand that a person who does not save money is the person who is taking risks with his or her future.
The writer is a student of MBA programme at Institute of Business Administration (IBA), University of Dhaka,
