Tips to Achieve Financial Security for Women in Kenya
Let’s talk about financial security for women. As of publishing this article, we are celebrating International Women’s Day —inspiring inclusion for women. As we all call for the inclusion of women, in this article, I will be talking about steps we can take as women to attain financial security.
Financial security empowers you to make informed decisions, plan for the future, and weather unexpected challenges. For women, it does more, like giving us the confidence and freedom to walk away from abusive situations. In this article, I will be talking about the must-have savings, investment, and insurance policies for women in Kenya.
Financial Security for Women: Must Have Savings, Investment, and Insurance Policies
Achieving financial security takes time, and dedication and requires a lot of work. However, it also requires you to be strategic about it, choosing the right tools that help you build a strong financial foundation and protect your assets and beneficiaries.
Savings Accounts
Let’s start this off with savings accounts. Savings accounts allow you to set money aside for certain goals in accounts that are very liquid, i.e., easy to withdraw your money. The idea is to help you meet expenses and other needs without liquidating your investments.
Emergency Fund
Having an emergency fund is non-negotiable. Because life is full of unexpected events, you want to be financially prepared to weather whatever comes your way as much as possible. That’s where an emergency fund comes in handy.
You could lose your job. A loved one might need emergency medical care. Your home might require repairs. The possibilities of life catching you unprepared are endless. Your emergency fund serves as your financial buffer, shielding you from such and other unforeseen challenges.
It’s advisable to have an emergency fund of 3 to 6 months of your living expenses. However, this can take time, especially if you are experiencing financial difficulties. In that case, start small with a quick-start emergency fund that can cushion you for at least a month or two.
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F*** You Fund
From unhealthy family situationships and abusive relationships to toxic workplaces that offer little to no benefits and inclusivity to women. Getting out of such situations can prove difficult for many reasons, like fear for one’s safety and emotional manipulation, among others. However, for this article, I am going to focus on another reason; financial dependency. Without a source of income, a lot of women get stuck in abusive relationships for fear of their financial situation, like paying bills and caring for children. When it comes to workplaces, it’s easy to stay due to concerns of losing a source of income or great benefits, or fear of pursuing other opportunities due to lack of skills.
That’s where a F*** You Fund comes in. Think of it as your solution to walking out of situations that no longer serve you without worrying about your financial situation.
Keep in mind that this fund is different from your emergency fund. Your emergency savings are for unexpected situations while a F*** You Fund is for affording you to walk away when your life or mental health feel threatened.
Sinking Funds
What other goals do you have? Upgrading your household appliances for seamless living? Paying off your debts? Go back to school to advance your education and career opportunities. Or embracing solo female travel to experience the world. Whatever other goals you want to achieve, create a sinking fund and start saving.
Join a Group
Chamas and table banking groups have been used for decades by low-income earning women to progress financially. These offer an avenue to save and even access credit at very affordable rates. Joining such a group can help you build a network of friends, build a saving habit, and build up a savings nest for your goals. It can also help you access credit you can use to further yourself financially.
Besides these individual goals, forming a group with fellow women whom you have common goals with can help you access more credit amounts from financial institutions, like Saccos and banks. Additionally, your group can pool funds for investing, especially in real estate which requires a significant amount to invest.
Have Your Own Investments
Saving is great, but you need to invest to build wealth. Here’s how you can start your investing journey;
Individual Retirement Account
Retirement is inevitable. It’s the cycle of life. The question is, will you be financially prepared for it?
Yes, it’s your time to rest. Finally. But, how will you foot the bills? Manage your changing lifestyle, which can come with age-related illnesses and other demands. Or, perhaps, enjoy your retirement by traveling the world? The bottom line is that money is essential at this stage.
Now is the right time to start building your retirement savings account. The further you are from retirement, the more time your retirement account has to benefit from compounding interest. That’s why it is important to start building it from a young age. But, if you are already in your 30’s and 40’s, it’s still not too late to start. It is better than not starting at all.
Don’t forget that the money you put into your retirement account helps you reduce your current tax liability. The allowable deduction is currently up to KSh. 20,000 per month.
Unit Trusts
Unit trusts are an excellent avenue to start your investing journey, especially with limited finances. For instance, you can start investing with a lot of unit trusts in Kenya with as low as KSh. 2,000. Additionally, they remove the aspect of having to manage individual investment assets by yourself. Unit trusts to consider include:
- Money Market Funds
- Equity Funds
- Bond Funds
- Balanced Funds
Government Securities
For low-risk investment assets, ensure that your portfolio has some investments in government securities. This can be either in T-bills or T-Bonds for short and long-term investments.
Treasury bonds are an excellent option for matching long-term cash-intensive events, like education and retirement. Plus, they will earn you regular passive income through the semi-annual coupon payments.
Stocks
While government securities and unit trusts have relatively low risk, don’t shy away from investing in riskier but more lucrative assets. Stocks make for an excellent option. They earn you income through dividend earnings and capital appreciation, especially if you hold them for the longer term.
Don’t miss this related read! Your Beginners Guide to Investing in the Kenyan Stock Market
Real Estate
Besides stocks, you can also make a higher return through real estate. This can be through properties, land, or REITs.
As a woman, it’s important to ensure that your name is on the deeds to the properties, even when purchased together with an intimate partner. Stories of women and their children being thrown out of their matrimonial homes by in-laws when the husband passes on are rampant. So are stories of women losing properties they bought or helped buy during divorce. While seeking legal redress can help, it comes at a cost that many cannot afford. Not forgetting lengthy court processes that drain the energy out of you. The bottom line is to ensure you take the necessary steps to have a claim on properties you buy jointly.
Starting a Business
Finally, if you have thought about breaking away from corporate life and being your own business, consider starting a business. It could be turning your hobby into a business, learning a new skill, or offering your skills as a consultant.
Whatever option you choose, just know that it is not a must that you dive right into it. Take time to prepare and plan, like creating your business plan or saving up capital to start the business. You can also start it as a side hustle, build it up slowly, and you can quit employment when you are ready to manage your business full-time.
Insurance Policies to Manage Your Risks
Insurance policies are necessary for managing risks. They allow you to share the burden of certain financial losses with another, i.e., your insurer.
Health Insurance
Medical costs can wipe out your savings and investments. That’s why a health insurance policy is a must-have. It will help you meet medical costs, including outpatient and inpatient. And, if you are planning to start a family, you can have your health insurance cover your maternity costs.
What to Consider When Looking for Health Insurance in Kenya
Life Insurance
Do you have beneficiaries whose financial situation would be affected significantly by your demise? A life insurance policy enables you to set up financially when you are no longer there to provide. This is money that can go to funding your kid’s education costs, ensuring they have access to quality education even in your absence.
A life insurance policy can be either:
- Whole life – this is a permanent life policy that pays payouts to your beneficiaries upon your demise. Whole-life policies can be expensive but also build a cash value.
- Term life – has a fixed term, like 10 years or 20 years. With term life, beneficiaries only benefit when the policyholder passes on during that period. Term life policies have a more affordable premium than whole life. This is an ideal option if you are on a budget but still need a life insurance product.
Home Insurance
Do you have beneficiaries whose financial situation would be affected significantly by your demise? A life insurance policy enables you to set up financially when you are no longer there to provide. This is money that can go to funding your kid’s education costs, ensuring they have access to quality education even in your absence.
More Tips to Help You Achieve Financial Security
The road to achieving financial security is more than knowing what savings, investment, and insurance policies to use. Your money behaviors and beliefs can go a long way in helping you achieve financial security.
Here’s what you can do;
- Work on your mindset about money
- Have a Financial Plan – Get your financial planning workbook here
- Create a budget and stick with it
- Review your finances regularly
- Increase your financial literacy
- Work with a professional
