Hello All,
This week’s update will be about a new savings program we have started.
Since starting the foundation, one of the life skills we have tried to drive into the kids is the importance of saving money and being financially intelligent. In the past we tried to implement a savings program, but the logistics of it were not great and in the end it failed. We recently found a bank that sells cans with a slit in the top, like piggy banks. Upon seeing this, we immediately bought the banks entire supply and wrote each child’s name on a can.
We then had a talk with the children about the power of saving small amounts of money regularly. The kids often get their hands on 5 -50 cents and usually spend this money on pop, sweets or other garbage. We explained to them that if they instead save that money, after a couple months they could have enough to buy a bike or nice outfit.
Their response and commitment to saving has blown away our expectations. Every single day kids of all ages excitedly bring money to put into their piggy banks. One young girl has even started a separate savings for her 1 year old baby brother. The boys are almost all saving up for a bike, a surprisingly liquid asset down here. The girls are mostly saving up for clothes or just saving to save.
We sincerely hope saving money becomes a habit for our children. When I started the foundation I read a book called Portfolios of the Poor. It was about a year-long study conducted in villages in Bangladesh, India and South Africa. The researchers interviewed various families throughout this year and had them keep “financial diaries”, a means of tracking household income and expenditures. They found that most impoverished families are not impoverished because money never enters their household, but rather they had relatively large incomes for small stretches and then little to no income for other stretches of time. Living down here I have seen the same thing, especially for men. A construction project will come up, and a man will get consistent work for the duration of that project. During this time the family will be relatively flush, bringing in far more money than they need to put food on the table or pay the rent. They will usually spend this excess cash on a TV, cell phone, fan, washing machine or other electric appliance. That job ends, and the man will be out of work for several weeks, during which time the family does not have enough money to put food on the table or pay rent. At this point they usually enter into loans with predatory lenders or start pawning the electric appliances they bought when times were good. Obviously pawning your stuff and entering into loans that have a 40% interest rate over a 10 week period (the going rate) is not great for your overall wealth accumulation.
We sincerely hope that our children will learn to plan a little better, so that they can have more stable households in their future. Saving money is a huge part of this. By the end of August some of our children should have amassed enough money for a bicycle or nice clothes, which will hopefully further motivate the rest to keep saving.
As always thank you all for your support, our work would not be possible without it.
