Judging by the vehicles on our roads, the smart phones in our pockets, and large flat screen televisions adorning our walls, you could be forgiven for thinking that Bhutan is not a least developed country.

Back stage, the reality is not as gold as the iPhone found in hundreds of hemchus or branded purses.

We sometimes hear stories of people selling ancestral land to buy a Prado or of families taking loans to go on vacations to Bangkok. These may be extreme examples, but such cases reflect how consumerist we are today. We love spending.

We could probably be forgiven for our impulses. It hasn’t been long since we emerged from being a barter society. Saving, investing, and insurance, among others are still fairly new concepts.

But with the economy monetized the time has come to change our financial habits. Bhutan urgently needs a savings culture.

Financial literacy is poor in Bhutan, especially among rural communities and the low-income groups.

An obvious step is to continue raising awareness about the benefits of saving money, and it is comforting to know that a national action plan is awaiting approval.

Any plan would use television, the newspapers, and radio to get across the message of how savings can benefit, but it is important that the content is designed so that it is relevant to Bhutanese society, and provide examples we can relate to.

Financial literacy should also be inculcated into the school curriculum, so the young are equipped with the financial discipline required to equip them to survive in a competitive world.

For the financially literate, it would make sense to begin developing a savings culture in your children at an early age. This can be achieved by making them understand that they can have that very expensive toy but if they do some chores and earn a cash reward, which they can then save to eventually afford it.

Developing financial literacy is a two-way street. The banks too must encourage this habit by being innovative and offering attractive products that makes it worthwhile to save. Yes, there are a few products, one aimed at children, the other at farmers, among others. But what could perhaps encourage savings in the near future is a revision of the savings interest rate.

It is important that the inflation rate is accounted for prior to determining the interest rate. If inflation is equal to or more than the interest rate then saving money would make no sense as earnings on interest are then eroded by inflation.

When the customer is aware that inflation devalues purchasing power of money, you only discourage them from saving.

The banks can also make it easier to save. The introduction of cash deposit ATMs is timely, perhaps overdue. Internet and mobile banking in Bhutan also needs to become easier and closer to real-time. Banks abroad have developed mobile apps that track customer spending habits and provide information that can encourage behavioral change.

But a recent study has shown that many who reside in rural areas are discouraged from using technology for their banking needs. There is a need for the banks to go the extra mile and accommodate this clientele. It would not be asking too much for banks to designate one or two officials to guide those who are unsure of how to operate an ATM.

The government could also provide incentives to encourage more banks to compete in the rural areas.

Only by meeting half way can savings be encouraged and horrible stories of bad loans and incredulous financial behaviour avoided.