When you ask a typical Filipino parent how she teaches her kids about money, she will likely say she takes her son or daughter to the bank to open a kiddie savings account. That is an excellent start.
According to a report by Bloomberg, the Philppines currently has "1.4 million kiddie savings accounts, amounting to a total savings of US$577 million, a total that’s risen by almost one third in the past three years." In Philippine pesos, that's about Php30.2 billion! (Currency exchange rate as of this writing was at Php52.36)
The Bloomberg report called kids like Raj Hortaleza, 11 years old, as the new heroes of Bangko Sentral ng Pilipinas (BSP). Raj opened his bank account with Php3,000, his Christmas aguinaldo. Then he has made it a habit of saving Php100 from his allowance every week and depositing it in his savings account.
"My parents always tell me not to spend too much on unnecessary things,” Raj told Bloomberg. "In case of an emergency, I can use it for something more important," he added.
That's good news for BSP because the Philippines currently has the lowest number of adults who own a bank account, according to World Bank data. BSP is counting on young savers to augment the country's low savings rates, and it hopes the kiddie savings accounts will instill a habit of saving money and good financial management skills until they grow up.
Philippine banks started offering kiddie savings accounts for children ages zero to 12 since 2011. Last year, banks widened the reach to cater to teenagers ages 13 to 19 as well. These kiddie savings accounts offer as low as P100 for minimum initial deposit.
Ateneo de Manila University economics professor Alvin Ang told Bloomberg that children acquire smart money habits such as financial planning, investing, or even saving from their parents or elders. Ang, who studied how households save and invest, suggests that if parents want to teach their kids about saving, they would have to practice what they preach.
Being money smart isn't just about saving cash, however. It's also learning how to grow money. Money management coach Rose Fres Fausto shared in an article on SmartParenting.com.ph that while children would benefit a lot from the habit of saving money, it's also important to learn how to grow that money. It's hard to invest money that you or your child doesn't have.
Local financial institutions have been reaching out to kids through comic books, graphic novels, guides, and books discussing savings and economic matters. Next year, BSP is planning to roll out a smartphone app and computer game to entice parents and kids to save.
This story originally appeared on Smartparenting.com.ph.
* Minor edits have been made by the Entrepreneur.com.ph editors.