Financial Wellness

Financial wellness is a major issue in South Africa


A recent Alexander Forbes Member Watch Survey shows that the average pensioner will be able to replace only 28% of his or her income once reaching retirement age. The latest statistics on credit indicate that two out of five credit-active South Africans have impaired credit records. There are many other statistics that point to the fact that a large number of South Africans are under severe financial pressure.

On average, employees are spending 13 hours a month (in some cases, even more than 20 hours) worrying about their finances. The issues that concern individuals differ according to income, gender, age and family circumstances. The major topic of concern, however, is the ability to make ends meet.

These issues also affect how much individuals save and whether they preserve their pension pay-outs when changing jobs. Low financial well-being ultimately has an impact on the employer’s balance sheet because financial stress leads to increased absenteeism, poor work performance, a lack of concentration and increased fraud.

Employers, therefore, have a vested interest in improving the financial well-being of their employees from a business output and productivity perspective.
As things stand, the financial sector separates debt management from wealth creation. Other areas of the financial continuum are also treated in silos. For example, health care is done separately from retirement funding. Yet all these matters are interconnected, each having a knock-on effect on the other.

For example, if an employee is over-indebted, it will affect how much they save towards retirement and whether or not they preserve those savings when changing jobs. This could also influence their health, and as such impact negatively on their medical aid claims. It will further affect how much time they spend at work worrying about all these issues which, in turn, will affect their production and performance.

It is thus up to the employer to minimise this vicious cycle as far as possible by implementing tactics such as financial well-being interventions in the workplace.
For financial well-being interventions to be successful they need to be part of a process that involves ongoing intervention and engagement across all income groups and throughout a person’s lifetime.

Iemas offers free financial wellness training to participating employer groups to assist their employees in their journey towards holistic financial wellness. These informative sessions deal with subjects such as compiling a budget, managing debt, savings, future financial planning and comprehensive financial wellness tips and information. To view and access these tips, visit Iemas on Facebook, Twitter, LinkedIn and YouTube or visit www.iemas.co.za for more information.

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