This week running from 14th to 20th March is Global Money Week (GMW), whose goal is to “promote the importance of financial literacy and the inclusion and empowerment of youth, in an effort to reshape finance and tackle the poverty trap that results from inadequate resources, knowledge, and education”. The theme of this year’s GMW is “Take Part. Save Smart!”
Inspired by FSD Kenya’s ‘2016 FinAccess National Household’ survey that produced lots of interesting findings about Kenya’s financial inclusion landscape (i.e. access, usage, quality and impact), below are three helpful tips on how you can participate in the GMW celebrations…
- Empower yourself with information about financial services
Knowledge is power, or so the saying goes.
Yesterday, a Think Business 2016 Kenya Banks Tariff Survey revealed not only that an average Kenyan is paying a mean of Sh12, 515 yearly in tariffs, but also exposed Kenya’s most expensive banks. Ironically, a startling finding of the FinAccess 2016 survey is that about 50% of Kenyans have no clue about which financial service provider has the lowest interest rates.
Than on average, Kenyan adults have about two sources of income, of which the median is KSh 6,700; there’s nothing as absurd as struggling to make ends meet and still have to pay more for financial services when there are better options and at cheaper rates. I therefore can’t stress enough the importance of shopping around before settling for a given solution. You owe it to yourself.
Make use of financial service comparison websites such as www.kenyacompare.com, www.revuka.com, www.pesacom.com, www.jijinimarkets.com etc. to empower yourself with the muscle you need to negotiate for better services and at better rates. Through them, you also get an opportunity to size all your available options, and potentially increase your chances of a good experience that you can then share with others. Take advantage of them but remember to also do your due diligence by contacting the financial service providers directly.
- Talk to your children about money
It is important that young people cultivate healthy money habits early on in order to avoid financial exclusion and develop key money-managing skills for later in life. According to GMW organizers, this will not only “pave the way for the next generation of economically empowered citizens, but also reshape finance and tackle the poverty trap that results from inadequate resources, knowledge, and education”.
As evident from figure 1 below, another salient fact to come out of the FinAccess study is that 79.9% of 16 to 17 year-olds depend on friends and family the most for financial advice.
Bearing the above in mind, it’s obvious that parents and guardians have an important role to play in educating their children about good money management.
According to a Cambridge University study, Habit Formation and Learning in Young Children, adult money habits are set by age seven. Other research by the Royal Economic Society show that children who are encouraged to save are far more likely to continue saving as adults. Therefore, there’s no better time than in childhood to start learning the value of money. Invest in teaching your child today to steer them towards a brighter future. A good place to start would be by demystifying financial concepts such as earning, budgeting, saving, credit/credit cards, investment, insurance, taxes, debt/borrowing, job creation, cost-cutting etc.
Most of these lessons can be taught through everyday life examples. For instance, reward your kids for helping out in the house, identify savings goals together and teach them to save that money by opening a savings account to enable them realize the set goals.
- Introduce someone to the concept of insurance
Additional insights from the 2016 FinAccess survey show that less than 30% of Kenyans have insurance. Take it upon yourself this week to educate at least one person about the importance of insurance.
According to the 2016 FinAccess survey, 40.9% of the respondents cited lack of awareness while another 35.2% cited inability to afford as the main reasons for not taking cover. 9.2% cited not seeing the benefits of insurance as the main reason.
A good place to start is by educating them on the benefits of the enhanced NHIF cover which include general consultations with doctors, laboratory tests, drugs, x-ray and ultrasound diagnosis, treatment of sexually transmitted infections, family planning, antenatal and post-natal care, clinical counselling services, health and wellness education; most of which were previously not available. Encourage them to register for NHIF if they haven’t. Cards are issued immediately upon application at any of the 75+ post offices throughout the country offering Huduma Services. You can even go a step further by supporting them through payments for the first couple months.
Visit the GMW website for additional resources that you can use to participate in the 2016 celebrations and even beyond.