What you need to know:
- As your parents grow older, they are likely to develop multiple health conditions because of weakening immune systems as they advance in age.
- If your parents have bank accounts and investments such as shares, take steps to update, automate and enroll their accounts online.
Every month, most men are obligated to pay “black tax”. This means they send home money to assist their parents and siblings. Usually, such financial obligations are borne out of indebtedness and guilt to one's parents. Without careful planning, they can handicap your ability to grow your wealth.
How does one then balance between supporting their family and astutely managing their personal finances?
As your parents grow older, they are likely to develop multiple health conditions because of weakening immune systems as they advance in age. Some of these conditions can be long-term and costly to treat or manage directly from your pocket. To avoid financial strain, look out for policy covers that are tailored for elderly people. The majority of these covers cater for hospitalisation, surgery, physiotherapy, drugs, and dressings. Some cover extra expenses such as treatment and surgery in foreign countries. “Minimum and maximum age allowed, medical history, underlying health conditions, budget and the minimum limits required are the primary factors you should look out for when taking a health cover for an elderly person aged 60 and above,” says Nancy Aketch, the managing director of Taraji Insurance Agency.
Funerals are costly. Children often feel obliged to give their parents a decent and expensive send-off. Yet, a survey by the Association of Kenya Insurers in 2018 shows that only 3 percent of Kenyans have taken funeral insurance. The same survey reveals that funeral expenses cost families between Sh50,000 and Sh2.5 million. All leading insurers in Kenya provide a form of funeral plan that caters for expenses such as mortuary fees, cost of a casket, hearse, flowers, funeral programs, and the refreshments taken during burials. Some premiums are as low as Sh. 250 per month.
If your parents were not formally employed or if they don’t earn a pension, you can enlist them in the government’s Inua Jamii programme. The programme provides monthly welfare support of Sh2000 to each elderly person. The Inua Jamii Cash Transfer Fund is operated by the Ministry of Labour and Social Protection through the State Department for Social Protection. To qualify, your parent should be aged seventy years and above.
Their accounts and investments
If your parents have bank accounts and investments such as shares, take steps to update, automate and enroll their accounts online. This will facilitate easy monitoring and access to their funds. “The aim is to have your parents at a point where they can go through their financial life without having the trouble of visiting the traditional bank,” says Howard Gleckman, the author of Caring for Our Parents. Find ways you can simplify and trim their budget as much as is comfortable. “Don’t overspend. An elderly person may no longer need lots of luxuries such as premium pay television and high-end cars. Their needs are pretty simple just as their lives are,” says personal finance coach Edward Okumu.
Don’t wait until your parents are elderly and ailing to set up a financial support system for them. Start now by informing them about the reversed care roles. “Parents may have difficulties accepting role reversal, but it is important to start conversations that will lead to a mutually beneficial support system,” says Okumu. You can offer examples of how this support system will work. If there is significant estate involved, find ways to draw up a formula of how the responsibilities your parent might be unable to fulfill such as banking services will be done. “The estate planning law in Kenya has provisions that allow for the financial power of attorney. This can allow you to make financial decisions on behalf of your elderly parents,” says Okumu. Instances that you can apply the power of attorney include the occurrence of age-related ailments such as dementia and Alzheimer’s. Okumu cautions that you must realise the money you’ll handle on behalf of your parents isn’t yours unless an estate plan has stipulated so.