HIGH school graduates have been receiving valuable advice on how to manage their finances from a top Bank of the Bahamas (BOB) executive with particular focus on savings.
Speaking on the topic “Savings - an absolute priority!” Kevin Hanna, BOB’s Treasury Manager, said it’s not necessary to be wealthy to be successful but it is what you do with what you have that makes the difference between success and failure.
Mr Hanna was addressing graduates at an employment seminar staged by the Executive Employment and Marketing agency at Sandals Resort.
“Too many people have very little knowledge of basic concepts involving money, Mr Hanna said. “Too many of us have bad spending habits. But the journey of 1,000 miles begins with a single step. If you have a job or receive an allowance you need to open a bank account and you need to start saving today. We all have to start somewhere.”
According to Mr Hanna the national savings rate is under stress at between 15 to 19 per cent of Gross Domestic Product compared with 44 per cent for some Asian countries, a fact which he said has serious implications for quality of life after retirement.
“Generally most Bahamians have less than $1,000 in the bank. They are under financial stress because they don’t know how to manage their money. If you don’t have financial discipline you will always be in debt. You need to get in your head that ‘when I start working the first thing I’m going to do is save some money’,” he said.
The graduates were advised to make sure that they do not spend more than they make and to learn the value of a dollar over time. He said saving just the $1.99 that some people spend on breakfast every day will add up over a year.
“If you start saving now you’d be amazed at the results of compounding interest on your money but you have to start today. You have to be cognisant of the things you want to achieve in your life. You have to have goals. Keep them in front of you and use your money to further your goals,” he said.
Some examples of goals he said young people entering the workforce might want to set would include saving towards buying a piece of property as soon as possible or becoming a successful entrepreneur.
According to Mr Hanna one of the impediments to successful saving is materialism and the power of advertising, which he said can destroy young people’s hopes and dreams.
“There is nothing wrong with desiring nice things but you have to control your appetite. You don’t need a new pair of shoes for every outfit. You have to know your panic buttons or the things that make you overspend. You have to cut back and start saving money,” he said.
Mr Hanna said the most important key to successful savings is creating a budget and paying your savings first before paying or spending on anything else. Additionally he said young people should consider investing in instruments such as stocks, bonds and mutual funds including government stock that can be purchased from the Central Bank for as little as $100.
“Let the time value of money work for you,” he said.