It is a known fact that many South Africans have been under financial pressure over the last couple of years. Just how much pressure we are talking about might surprise you, as recent research undertaken by Momentum and Unisa found that 73.5% of South African households were financially unwell in 2017. The decline in household wealth can be attributed to many factors such as the negative growth in house prices as well as a general lack of means and skills needed by individuals and households to take control of their finances.
“Households do not have control over macroeconomic factors such as political instability and low economic growth, however they can improve their own financial education to ensure that they have the skills required to become financially well even during trying economic times” says Johan Nel, CEO of Iemas Financial Services.
Achieving basic financial wellness is mainly dependent on four factors:
- Compiling and managing a budget on a monthly basis; thus ensuring that your expenses do not exceed your income
- Taking control of your debt by paying instalments timeously; as well as paying off debt with the highest interest rates first
- Saving on a monthly basis. A good rule of thumb is to save at least 20% of your monthly income
- Planning for the future; thus making sufficient provision for retirement; and having adequate short, long and funeral insurance cover in place.
“You do not need an accounting degree to manage your finances responsibly, in fact there are many products and free financial education material out there to assist you on your journey towards financial wellness” says Nel.
Various financial services organisations, including Iemas, focus on the financial wellbeing of their clients through tailor-made products and financial education initiatives. “Not only do we provide financial products and services at more than 600 contracted employers to assist their employees in achieving financial wellness, but we also offer free financial wellness training at these employers in an effort to contribute to closing the existing financial skills gap” concludes Nel.
Read other interesting blog articles here: Iemas offers affordable financing solutions to assist matric graduates in building a bright future or Iemas Financial Services looks at the impact of low or negative economic growth and how to cope financially during these trying economic times