Last week, the world observed Global Money Week, an initiative dedicated to promoting financial literacy among young people. It is a moment to position the youth at the heart of the conversation on financial knowledge.
With this year’s theme, 'Smart Money Talks,' arriving at a critical time, we are reminded that while financial literacy is about acquiring the basic knowledge and discipline needed to manage money wisely, the latest statistics reveal that we still face significant gaps in financial behaviour and resilience.
According to FinAccess survey of 2024, 84.8 per cent of adults have access to formal financial services, up from 83.7 per cent in 2021. However, access does not necessarily translate to financial health. The hard truth is that only18.3 per cent of Kenyan adults are considered financially healthy, meaning the vast majority are still fighting to build financial resilience or plan for the long term.
The report also shows that while financial literacy is inching up, it remains low, with only 42 per cent of Kenyans demonstrating strong money management skills. This leaves our youth vulnerable to poor decisions and sudden financial shocks. The rise of digital credit has created new pitfalls, with young borrowers bearing the brunt of the debt burden. We must also remember that nearly half of those who are financially excluded are rural youth.
These figures present a clear opportunity for young people to rethink how they build wealth in a modern economy.For our youth, it begins with a few critical habits.
It has often been said that youth lack the capital needed to start businesses. While this may be true, they possess something far more powerful, human capital, which is essentially thecreativity, knowledge and skills to generate income.
With the growth of the digital space, opportunities have been made available for them to optimise their skills with limited investment. At a young age, therefore, the greatest focus should be on developing skills that increase earning power. As your expertise becomes more valuable, so does the opportunity for additional income.
Another strategy is building assets that generate income even when you are not actively working. Land, for instance, has traditionally been seen as a store of value, but true resilience requires one to balance emotional attachment to assets with financial practicality.
For example, owning multiple small plots that do not generate income is rarely the right call. Sometimes, consolidating or selling some assets to invest in income-generating opportunities such as rental propertyor businessescan create a stronger financial outcome.The key question you ought to ask yourself is whether the asset is generatingincome.
For many young people, retirement planning often feels like a distant concern,but the earlier it begins, the more secure the future becomes. At a younger age, there is greater room to take calculated risks in business or investment and still have time to recover and grow. As the years go by, that flexibility naturally reduces.
As such,even with a modest income, the importance of having a financial plan cannot be overstated. With a solid plan, you have a roadmap for saving and investing, ultimately working towards your long-term goals.
Beyond personal planning, youth must actively leverage government-backed initiatives before the window of eligibility closes. Programmes like Nyota offer a critical head start, providing not just affordable credit, but essential entrepreneurship training.
Far too many young people only discover these resources once they have aged out of the criteria. By capitalising on these programmes early, the youth can cultivate the discipline and capital necessary to accelerate their journey toward financial independence.
Young people should also learn to progress through financial products as their financial foundation strengthens. This journey typically begins with a simple savings account, eventually graduating to products such as Money Market Funds, Treasury bills, and Treasury bonds, which offer more stable, competitive returns. This shift marks the transition from basic saving to active investing.
Parallel to savings and investments, insurance also plays a critical role in wealth protection. Health insurance, for instance, ensures that a medical emergency does not erase decades of financial discipline. Ideally, returns from your investments should eventually cover such costs, leaving your core savings untouched and your financial future secure.
It is also important to guard against modern financial pressures such as ‘fear of missing out’ (FOMO), the culture of ‘you only live once’ (YOLO) and revenge spending. Although enjoying life is important, reckless spending can easily derail long-term financial goals.True financial success is not measured by how much money one spends, but by how much freedom and security one's finances provide.
Banks have historically played a key role in promoting a savings culture among youthby providing accessible savings products, encouraging disciplined deposits and promoting financial education.
Today’s youth stand at a rare intersection of opportunity and responsibility. With the technology accelerating and the economy evolving, we are reminded that financial literacy guides our everyday choices and long-term decisions.
Managing Director, Postbank
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