By Akintola Benson -Oke
Viewpoint  In Brief: Good money management habits

By honing and sharpening the skills of its officers, Lagos State Pension Commission, LASPEC, continues to carry out its core mandate as envisaged by the Lagos State government. We all owe a debt gratitude to Governor  Akinwunmi Ambode  for his dedication to the funding and prioritization of staff development initiatives.

The importance of financial literacy in today’s economy cannot be over-emphasised. In the first place, ordinary consumers are shouldering more of the financial decisions: Retirement planning is one example of this shift. Past generations depended on pension funds to provide the bulk of their retirement funding. Pension funds are managed by professionals and put the financial burden on the companies or governments that sponsored them. Consumers were not involved with the decision-making, typically did not even contribute their own funds, and they were rarely made aware of the funding status or investments held by the pension. It is different today as employees are now required to take active part in making decisions that affect their pension assets.

Furthermore, there are more complex options confronting consumers of financial services. Consumers are today being asked to choose among various investment and savings products. These products are more sophisticated than in the past, asking consumers to choose among different products options offering varying interest rates and maturities, decisions they are not adequately educated to make. Deciding on complex financial instruments with a large range of options can impact the consumer’s ability to buy a home, finance an education or save for retirement, further complicating financial decision-making.

The subject of training programme is the mastery of the basics of investment. This is of great importance to officers of LASPEC who, from time to time, may have to take decisions on investment matters or advise officers and especially, retirees of the Lagos State Public Service on investment options, albeit on a non-professional basis.

‘What is investing?’ It is actually simple: “investing means putting your money to work for you–actually, it’s a different way to think about how to make money. Growing up, most of us were taught that you can earn an income only by getting a job and working. And so that’s what most of us do. But there’s a limit to how much we can work and how much money we make out of it–not to mention the fact that having a bunch of money is no fun if we don’t have the leisure time to enjoy it.”

In understanding what investment is, it is equally important to understand what investment is not. It has been said that it is important to note that investing is NOT gambling. Gambling is putting money at risk by betting on an uncertain outcome with the hope that you might win money.

A ‘real’ investor does not simply throw his or her money at any random investment; he or she performs thorough analysis and commits capital only when there is a reasonable expectation of profit. Yes, there still is risk, and there are no guarantees, but investing is more than simply hoping lady luck is on your side.

There are many different ways you can go about making an investment. This includes putting money into stocks, bonds, mutual funds, real estate, gold etc. The point is that no matter the method you choose to invest, the goal is always to put your money to work so it earns you an additional profit. Even though this is a simple idea, it’s the most important concept for you to understand.

Why should this knowledge matter to officers of LASPEC? Among others, sound financial and investment literacy will help officers of LASPEC to conceive a more robust view of the mission of the commission and their role in fulfilling that mission; offer primary level, non-professional guidance to retirees and pensioners of the Lagos State Public Service; enable interaction with stakeholders in the pension management network from an informed point of view; offer informed advisory services to the government of Lagos State; recognise and avoid fraud; prepare for retirement; seek out help when needed; learn how to cope with dire financial situations; and get educated by experts.

In addition to benefitting the officers of LASPEC and LASPEC itself, the Lagos State Public Service itself stands to gain from having a financially literate public service. Among others, a financially literate public service adds value to the lives of employees, and empowers them, free of charge; influences productivity levels, by assisting with elimination of financial stresses; and teaches employees that despite our earning levels, we can all learn good money management habits and we can all aspire to a good level of financial security.

 *Benson Oke  is Commissioner, Lagos State Ministry of Establishments, Training and Pensions