It’s All Fake, We Are Millionaires

It’s a few days to the end of the year, and it has got me thinking about my life more than usual. I think it is from this sentiment that ‘new year resolutions’ were invented. In preparation of the New Year, I have been thinking of ways to improve my adulting experience. One of the aspects of my life that I need to ‘put in rice’ is my finances.

I have a bank account. My usage of said bank account depends on the source of my income at any one time. When I have a full time job, which usually comes with a mandatory requirement of a bank account, I use it regularly, and even then it is to a certain extent; i.e until I withdraw all the money. For context, I once had a job where I would withdraw my salary at once, because anything more than once would lead me to incur charges I couldn’t afford.

With only 11 out of every 100 adults having access to bank accounts, and only 7 being active users, that makes me 1 of the 4 that don’t regularly use their bank accounts.

When I am working part time jobs, payments are usually made in cash or through mobile money, assuming they are made at all. Depending on the amount, I will either keep it under my pillow, or deposit it on mobile money.

A fully financially included person should have a saving bank account, an insurance policy, a pension plan and an investment account. Going by this, I am not fully financially included (derived from financial inclusion).

Financial inclusion is a recent term with varying definitions depending on the organization’s agenda. One of the broad definitions explains it as the number of adult Ugandans who have a bank account, (and the degree of usage of that bank account), and how many other financial services they use in their everyday life. Financial services include saving, borrowing, insurance, investment and pension.

Financial inclusion aims at increasing the wellbeing of a person. I don’t know about you, but I like the sound of this.

What Does Being Fully Financially Included Mean For Me?

If I fall sick (like I did about 2 weeks ago), I wouldn’t have to incur any unexpected costs which means that I can stick to my budget and live within my means, as per my earlier planned budget. So uninsured me had to self-medicate, and the disadvantages of that are numerous.

An investment account would turn my savings into assets, which would create a more permanent stream of income. In which case, if I wanted to volunteer full time with a nonprofit organization like 40 Days over 40 Smiles Foundation, I could do it without robbing a bank. If I just want to start a business, I can do so with my own capital.

A pension plan, because no one wants to die working, and The Taj Mahal won’t visit itself.

Knowing all of this, the real question is why I haven’t yet achieved full financial inclusion status. Luckily, I have the answers;

  1. Insurance: Unless I am working with an organization that offers insurance, I can’t afford to pay for my own insurance. Of course, my reason is the usual ‘I don’t get sick a lot’, but it doesn’t make sense to me to make monthly payments (with money I don’t have) for something that happens so rarely. Considering that I have a sister who works in the insurance sector, you have to commend my capacity to remain uninsured.

Also, according to FinScope 2013, only 2% of the adult population uses formal insurance products which is an indicator of the low penetration of insurance.

  1. Investment: This solely relies on one’s savings, and that is shaky ground for me. The options that create investment opportunities for passive income with my level of income are few which makes it a bit problematic.
  2. Pension: My retirement plan (or its lack of) scares me a lot. I don’t want to die working. Sigh. I have some money with NSSF but I’d probably need three lifetimes for it to amount to something worth writing home about.

And so where does that leave me?

In a vulnerable position, that can fortunately be remedied; with a little information to make more informed financial decisions.

Do you have a bank account, and how often do you use it? Are you insured? Basically, are you a fully financially included individual?


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Master of Destiny: Employer Feature

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