Author Name -02 July 2022

Teaching your employees about personal finance is beneficial to them, to your business and to the economy. Here’s how to get started with building a financially fit workforce.

As living costs continue to soar, South Africans across the board are feeling the pinch. Add to this our nation’s low financial literacy rate and the fact that we’re among the worst savers in the world – a survey by accounting firm Deloitte shows that seven out of 10 South Africans spend all, or more, of their income every month – and it’s clear that there’s a serious need for better financial education in SA.

What part can you play in improving financial literacy? You can start within your organisation, by teaching your employees the basics of personal finance.

The importance of financial well-being

You already pay your employees a salary and possibly provide benefits too, so you may be inclined to think this is where your financial responsibility to them ends.

But consider the burden of money worries on your workforce: a recent study suggests that 54% of South Africans cannot make their money stretch to the end of the month, and 57% are more stressed about money than anything else, including their health and the pandemic.

Financial stress can take a huge toll on mental well-being, which in turn impacts employee performance and productivity. Your people are your organisation’s greatest asset – a healthy workforce equals a healthy business, so helping your employees take care of their mental health by easing financial stress is in your best interests, too.

Finance 101

It’s difficult to know who among your employees needs to learn what when it comes to finance, but don’t let that stop your organisation from talking openly about money matters. Also, don’t assume there’s a basic level of financial literacy, or that higher earners are necessarily more money-savvy. Start by going back to basics and covering personal-finance fundamentals, like:

• Budgeting. You may be surprised by how few of your employees work with (or stick to) a monthly budget. It’s important to drive home the message that a budget is an essential tool for better money management, guarding against overspending and helping individuals save. If your employees can start seeing a budget as a means to greater peace of mind about money, they may be more inclined to use one.
• Debt management. Did you know that, according to research, South Africans spend 75% of their take-home pay on debt? This means that the majority of your workforce has only a quarter of their salary left to spend or save every month. What’s more, these numbers don’t take into account debt incurred through informal credit providers, like loan sharks. It’s vital that your workforce understands the true cost of debt, interest rates, how much debt they can afford and how debt consolidation and debt counselling can help.
• The importance of saving. Experts recommend having three months’ worth of take-home pay saved as a buffer in case of unforeseen expenses, but research shows that very few South Africans have any kind of emergency savings at all. Ask your employees to think about how they’d fix or replace something like a stolen phone, a burst geyser, a broken washing machine or a chipped tooth … without getting into debt.
• Wealth creation. A step up from emergency-fund saving is saving for the future. Your employees may already be doing this through their pension plan, but do they understand that their pension is just one form of investment? Make sure they’re aware of how much of their salary goes towards their pension, the benefit of increasing their contributions and how much they might need to save in addition towards their retirement or towards other significant life goals, like putting down a deposit on a home.

Calling in the experts

However you choose to talk about financial well-being in the workplace – informal workshops, drop-in info sessions, online tools, e-learning, confidential counselling services – this is a topic that’s likely to require some expert input.

To find out about Life Health Solutions integrated well-being services and our Employee Wellness Programme, get in touch on ewp@lifehealthcare.co.za or 011 219 0000.