Child Trust Fund in UK versus ChildHope Financial Education Programme

First and foremost what is Child Trust Fund. According to Wikepedia "A Child Trust Fund (CTF) is a long-term savings or investment account for children in the United Kingdom. The UK Government introduced the Child Trust Fund with the aim of ensuring every child has savings at the age of 18, helping children get into the habit of saving whilst teaching them the benefits of saving and helping them understand personal finance. The Child Trust Fund scheme was promised in the Labour Party's 2001 election manifesto,[1] and launched in January 2005, with children born after 1 September 2002 eligible.[2]

Eligible children receive an initial subscription from the government in the form of a voucher for at least £250. In 2010/11 the child trust fund policy is expected to cost around £520m, less than 0.5% of the £84bn UK education budget.[3] Because the scheme allows for family and friends to top up trust funds, it has given a substantial boost to savings rates, particularly among the poor. According to the Children's Mutual, "In terms of changing people's behaviour, this is the most successful product there's ever been."[4] For households with income of £19,000 a year, 30% of the children in that category are having £19 a month saved for them. Part of this is due to grandparents being more willing to contribute to funds, since the money cannot be diverted to the family finances.[4] The fund is due to be wound up in January 2011."

Retrieved July 31, 2010 from http://en.wikipedia.org/wiki/Child_Trust_Fund

So the next question is: Do we have something like this in the Philippines? The answer is simply: NO.

Do we have something similar with the Child Trust Fund. The answer:

...NO (technically)

In the UK a household income of £19,000 a month can be considered poor. Here in the Philippine with the prevailing exchange rate of P71.39 as of July 31, 2010 that is about P1,356,410. In the UK, 30 percent of these children belonging to this household will be able to save at least £19 a month saved for them or about P1,356.41 a month here in the Philippines. Of course, this is with the help of lolo and lola, mom and dad and other family friend as well.

Exchange rate taken from http://search.yahoo.com/search?p=Pounds+to+Philippine+peso&ei=UTF-8&fr=chr-greentree_ff&type=971163

So what do we have here in the Philippines?

There is a program called Childhope Financial Education Programme which is geared towards helping street kids or those who are called "tak-tak" kids save part of their earnings so that they can use their money later on for important or emergency things. This is also in the hopes of steering them away from their vices such as gambling, smoking or even taking drugs. The Childhope Financial Education programme works like a bank wherein these kids will have their own savings account. The Childhope Financial Education programme is available for kids 12 to 18 years old. These kids turn in any amount of money they can to save for that day to area-based educators who record their deposits and facilitates withdraws as well. The average savings of these kids is about P20 pesos or in pounds that's about £0.28 cents. On the other hand, in an article entitled "Street Kids Learn to Save in Times of Crisis", Darwin Anolin, coordinator of Childhope’s Financial Education Programme said that last 2009 due to the economic crisis, Filipino under-privileged kids had a harder time saving.

To read the article about these saving street kids, you can visit http://www.ipsnews.net/news.asp?idnews=50229

Still, we can say that the ChildHope Financial Education programme is still a contribution to address the less than 5 percent of Filipino kids who regularly saves as per the Citibank Financial Quotient Survey in 2008. For a full report you can download it at www.citibank.com.au/global_docs/CitiFinQReport.pdf

Hence, what are the similarities of the Child Trust Fund in UK and the ChildHope Programme in the Philippines:
1. Both are savings account
2. Both programs encourage people to save regularly
3. Both promotes savings at an early age
4. Both are geared to help the poor have more financial independence until they need to pay for something important.

However there are remarkable differences:
1. For the Child Trust Fund "Eligible children receive an initial subscription from the government in the form of a voucher for at least £250" for the ChildHope programme the government has zero contribution.
2. The Child Trust Fund is a government sponsored-program while the ChildHope program is run by an non-governmental organization, ChildHope.
3. The Child Trust Fund is a long term savings and investment account while savings in the ChildHope program can be withdrawn anytime.
4. The Child Trust Fund is supported by banks while the savings in the ChildHope programme are not. According to the article mentioned above, "Typical commercial banks deny credit to customers who have an unstable source of income or cannot meet a minimum balance or deposit".

In my personal knowledge the lowest minimum balance or deposit for children's savings account is P500 as promoted by banks such as BDO Jr. Savings Account, RCBC's WISE Savings account and Metrobank. Accounts with less than P500 will incur penalties resulting to the principal amount being deducted.

There are several differences other people may think of but I listed only the top 4 I can come up with in comparison to the top 4 similarities these two programs have . It appears that the Child Trust Fund in UK have significant advantages compared to the ChildHope Financial Education Programme in the Philippines for now.

As of today, the ChildHope organization is still very much alive. You can find information about the group in their Facebook page http://www.facebook.com/home.php?#!/pages/Childhope-Asia-Philippines/140875859272643?ref=ts

Financial Literacy Activities for Filipino Kids

This is the first of the many blogs about fun, financial literacy activities for Filipino kids. This blog is inspired by my Masteral thesis which is currently ongoing at the University of the Philippines (Diliman) under the Special Education Program of the College Education.

My dream is to be able to make use of my research in different schools vis-a-vis touching the lives of thousands and even millions of Filipino kids who are going to be future consumers and employers of our country.

I dream that instead of breeding future employees and telling our students to find a good decent job with a decent pay, we will be encouraging them to be entrepreneurs, businessmen and businesswomen, creators, scientists, innovators and visionaries.

Hence, this blog will contain a collection of all the articles I have collected in my research, strategies different countries are doing to promote financial literacy for children but at the same time it will be made in the light which is fun, exciting and engaging.

It will give information on how is our country doing compared to our neighbors in promoting financial literacy to their kids. Are we at par? or are we left behind? Howe can we improve? What can parents and teachers do to promote this? What can banks do? government officials? business owners? and other possible stakeholders for this project.

Let's start the wonderful journey of imparting Financial Literacy Activities to Filipino kids.