Monday 16 April 2018 28 BUSINESS DAY This is M NEY A daily guide to your Personal Finance • Savings • Travel • Debt & Borrowing • Utilities • Managing your Tax Reasons why you should have health insurance As important and beneficial as health insurance is, it is sad to find that the level of penetration in Nigeria is still less than 5 percent. It appears that the major reason for this is ignorance. Many Nigerians have never heard about health insurance, have no idea how it works – let alone its benefits – and therefore have not made any attempt to purchase it for themselves or their families. Here are the top seven reasons why you should have health insurance: You’re Protected When You Need Urgent and Unexpected Medical Attention Sickness and injuries do not always give advance notice. With a health insurance policy in place it is comforting to know that you can have access to good quality medical care when you fall ill unexpectedly, or when you’re injured in an accident and require urgent medical attention. Especially if this happens at a time when you’re not financially buoyant or in a position to be able to pay your hospital bill from your pocket. You Have Access To Better Quality Health Service With a health insurance policy in place, you are exposed to a wide range of options of care providers (medical facilities) to choose from. You can decide to choose an upscale provider (depending on your particular plan) which you might ordinarily not be able to afford on a pay-as-you-go basis. It Helps In Your Personal Financial Planning Your personal financial planning is made much easier when you are able to budget in advance for (at least a significant portion) of your healthcare expenditure. Health insurance gives you this advantage. It Is Cheaper For You On The Long Run A health insurance policy tends to be aggregately cheaper than a pay-as-yougo arrangement, especially when you have a tendency to fall ill often, as might sometimes happen. A oneoff premium payment covers you for the full period of the policy. You also have an opportunity to choose a plan to cover more serious medical procedures like minor surgeries and caesarian sections, which would otherwise be very expensive if you had to pay for them from your pocket. You Can Present It As A Gift Or Employee Benefit For employers of labour, health insurance is one of the most valuable employee benefits you can give to your employees. It does a great deal for employee moral when they know that the burden of healthcare costs is off their family budgets. You can also purchase a health insurance policy and present as a gift to your friends, parents and other loved ones. That’s certainly something to think about! It Will Help Develop The Health And Medical A good, effective and affordable health insurance system helps the society to move closer to universal access to healthcare, which is one of the ways to aggregately raise the quality of life of the citizens irrespective of their income group Sector As the demand for health insurance grows and more people get signed up, this will stimulate growth for the health sector in general as investors and medical entrepreneurs will be encouraged to build more hospitals, health facilities and diagnostic centres, more doctors and medical workers will need to be trained. Not only will the standard and quality of medical services for the citizens improve, it will become more accessible to many more people. It Allows Equitable Distribution of Health Costs Across Different Income Groups Health insurance serves as one of the ways of re-distributing wealth within the society. It helps in reducing the gap in the quality of life between the rich and the poor, because it enables the poor to also have access to a reasonably good and affordable quality of healthcare. A good, effective and affordable health insurance system helps the society to move closer to universal access to healthcare, which is one of the ways to aggregately raise the quality of life of the citizens irrespective of their income group.If you do not already have a health insurance policy, what are you waiting for? Unclaimed money recovery: Is it a scam or an opportunity? Have you been personally targeted by ads offering to help you find “unclaimed” money? If you immediately wrote them off as scams, you were wise — but that doesn’t mean unclaimed money itself is a scam. The US government estimates that billions of dollars each year go unclaimed, just as the advertisements say — and your name could be on some of it. No one says no to money that belongs to them. This is the reason unclaimed money scams are so widespread. Even if there’s only a slim chance you’ve inherited a fortune, you may be entitled to anything from a few dollars to a few hundred dollars — money that could go toward a savings goal, paying off debt, or just enjoying a nice dinner out. If you’re interested in reconnecting with your longlost dollars, it’s important to know how to recognize the scams and find legitimate sources. But, first, let’s discuss where all this unclaimed money comes from. Sometimes, people deposit a small sum in a savings account and forget about it, overpay a utility bill, or qualify for an unexpected tax refund. If they move and fail to leave a forwarding address, it can be impossible for the issuing party to locate them — especially if they move out of state. After a year, unclaimed property laws usually dictate that this money is returned to the state, where the sum is held until it can be returned to its rightful owner
Monday 16 April 2018 This is M NEY A daily guide to your Personal Finance C002D5556 BUSINESS DAY • Savings • Travel • Debt & Borrowing • Utilities • Managing your Tax 29 Worried about bank charges, here is how to reduce them Kenneth Doghudge Are bank charges causing you to have sleepless nights? Are you wondering why you must pay every time you perform a transaction? Seeing your bank charges add up to substantial sums can be irritating and annoying. The bank might provide poor service, or worse still refuse to support you. “And I still have to pay bank charges?” might be the question on your mind. So can we totally eliminate these charges? No. Banks provide financial services to the public. They are expected to charge customers and make a profit in return. Bank charges therefore represents compensation for services rendered. Alas without it no bank would be able to survive, let alone thrive. Bank charges may differ from country to country. There are certain climes where the government collects stamp duty, a type of tax on banking transactions in addition. Bank charges, like death and taxes have now become a fact of life. You can hardly fight or refuse to pay them. Banks take the money out of your account monthly. In fact, the more transactions you undertake the greater your bank charges. While bank charges are here to stay certain steps can be taken to reduce them to the barest minimum. You need to do the following: Acquaint thyself with your current exposure to bank charges Come to terms with your bank charges by making a detailed study of your statement. Request your statement from the bank and check, on a line by line basis transactions done in the month. Also check what your total charges amount to. You could be in for a rude awakening. I recently did, and it wasn’t a pleasant experience. I didn’t have a clue that I was spending so much on charges. You can only make changes when you understand the magnitude of the problem. Determine to reduce them Acquaint thyself with the number of transactions you initiate regularly How many bank transactions do you make in a day? Did you know that each time you use the ATM, POS machines, mobile and internet banking is one banking transaction? Each usage may have fees attached. Electronic deposits into your account also attract charges. Scan your bank statement to identify why so many transactions. Try to understand the reason behind each transaction to see if it could be stopped in subsequent periods. Paying recurring bills in cash It’s advisable to keep some loose cash to pay smaller and regular bills. At the beginning of the week withdraw certain amounts to cover all your recurring expenses. Petrol, Transport, Lunch, Telephone etc should be planned for. This will cause you to avoid whipping out your card to pay for these items thus causing your bank charges to skyrocket. Leave plastic cards at home whenever possible. Carrying your plastic cards everywhere you go is not a good idea. You should leave them at home from time to time. Planning what you want to spend on in advance can help minimise spending. You could then carry only the money for your planned spending on you. Try to make it a little bit harder to access your money wherever you go. Earmark several days as “no spending days” Plan and mark several days in your calendar as days where you won’t be spending any money. Start out with marking one day a week which could grow to several days a week. No spending amounts to no charges. So challenge yourself not to spend. You’re not going to die if you don’t spend I can assure. Having no spend days will help you manage your money better. Seek and use accounts with lower bank charges Currently there is a wide variety of bank account products. In the past it used to be only current and savings accounts. There are accounts for small and big businesses, children, students, retired people, high net worth individuals and so on. In addition there are accounts for investments, fixed deposits, mutual funds etc. Please research and weigh the pros and cons before you sign up for any account. Be constantly on the lookout for accounts with lower fees that best matches your requirements such as lower bank charges. Use debt wisely Be careful when you use debt. Especially when it is not for purposes that will bring more money into your pocket. For instance when you use your credit card to pay for items. If you don’t pay back within the time limit the bank will charge interest on the debt plus several fees for using the card. The same occurs when you have a loan facility. Interest rates and bank charges usually change in favor of the lender, not the lendee. Taking on debt usually causes your bank charges to increase significantly. Trim down the number of accounts you have The more accounts you operate/keep the more bank charges you pay out, pure and simple. Most people keep plenty of accounts. Some might have even gone dormant. I’m sure when you calculate your total bank charges in one year you might realise the level of wastage you have been exposed to. It’s time to streamline the number of accounts you have. There are several debates on how many accounts someone should have. I urge you to be mindful and not duplicate similar accounts unnecessarily. Permit me to re-emphasize that immediately after reading this you should get all your account statements. Work out how much you have been paying as bank charges in the last 1 year. Take time to implement all 8 key points listed above to reduce fees paid going forward. This is guaranteed to save you thousands yearly. Now who wouldn’t be happy with that? Kenneth promotes Moneytalk, a knowledge based organization committed to dispensing financial intelligence that leads to financial freedom. You can reach him with your feedback on money@ moneytalkng.com or 070 6337 3391 if you would like him to facilitate Money talks and lessons at your events, seminars or conferences over the weekend in the Lagos area. You can also visit www. moneytalkng.com for additional resources on financial intelligence. Taking firm decision about your retirement planning Pension and retirement funds are crucial to everybody. But unfortunately it is one of the least financial planning we think about. Eventually everybody has to stop working. After years of hard work you should be able to put your feet up and enjoy some peace. That is not the time to be worrying about your bills and other things that you need money to accomplish. So what happens to your expenses? They don’t go away. In fact, your essential expenditures may become more expensive if you factor in inflation. It is time to take action and if you have just started working, you can start early. Early planning is best for pension savings. A regular amount put away yields a lump sum amount through the years. There are many examples where a disciplined investment started early has proved to be more beneficial than chaotic lumps at irregular intervals. So start early. Subsequently is regarding the amount to be saved each month. How much is sufficient? Well, that depends on your ability to pay. Try to put away a fixed amount. As it is always said pay yourself first when you receive your salary or income each month. If you are employed try to save in work linked pen- sion plans in which your employer contributes some amount. This is beneficial as these pension schemes are invested in government bonds and offer good returns with stability. Many things have to be considered when picking a pension plan. Find out how much of your pension is taxable and at what percentage. It pays to take the advice of your personal financial planners or legal adviser who has experience and knowledge in pension and retirement program. They are not part of any one organization pushing those plans. They will work individually with you to provide the best plan exclusively based on your needs. Find out if the pensions or at least a part of it will go to your spouse or dependents. So not blindly trust that it will automatically go to them. Read the fine print! Take charge and do not be a passive participant. Usually pension money is retained with the employer till a worker retires. It is good to know whether this money is safe and in the event of employer declaring bankruptcy or going out of business what happens to the money. Always ask relevant questions and never assume things. The stakes are simply too high. You should also start investing in bonds and share market early on in your career.