The Tribune

YOUNG achievers have been urged to resist the temptation to spend money on things they don’t need if they want to ensure their long-term future.

Kevin Hanna, manager of the Treasury Department at Bank of The Bahamas, recently urged young people at a national Junior Achievement Conference at St Anne’s School to resist the temptation of buying things they don’t need.

Instead, he said, they should focus on developing sound budgeting and savings habits for the future.

Mr Hanna said financial discipline is critical to future success in life.

“If you do not have sound personal budgeting strategies and financial discipline, you will always be in debt and you will always be unable to properly manage your money,” Mr Hanna said.

On the other hand, he explained, budgeting and saving will ensure that funds are available when needed for achieving such important goals as paying for a college education, buying a home or starting a business.

“If you want to start a business you need more than just a good idea.

“You need to have some capital saved as well,” Mr Hanna said.

According to Mr Hanna Standard and Poors (S&P) has termed the Bahamas’ national savings rate as “stubbornly low” and in May 2012, the Bahamas’ rate was just 10 per cent of GDP compared with some Asian nations, which was 20 per cent of GDP.

He said that on average Bahamians save just eight cents out of every dollar.

He suggested that the one reason why our savings rate is so low is that we are driven by the power of advertising to buy things we don’t need and spend money to “look good” rather than saving to create wealth as do some other nations.

“We spend our money on some interesting things like designer clothes and Brazilian Remy.

“Most of you have a smart phone, but as a teenager do you really need a smart phone? Maybe what you need is a bubbla,” Mr Hanna said.

Mr Hanna told the Junior Achievers that the earlier they start saving the better it will be for them.

He outlined a number of savings strategies, such as eating breakfast at home, using a free texting application, setting aside $10 a week from their allowance and lunch money and taking lunch from home instead of buying lunch.

“Everyone should have a savings account, whether at Bank of Bahamas (BOB) or another financial institution.

“You should treat savings like a bill and pay yourself first,” he urged.

Mr Hanna also said that it is very important to understand the time value of money and maximise the opportunity to grow money over time through compounded interest and investments like stocks, bonds and mutual funds that earn interest and pay dividends.