Making sense of your cents

The coronavirus COVID-19 pandemic has impacted the lives of people worldwide in so many ways, not least of all by taking a serious toll on the emotional and financial well-being of its various population groups. In a recent online survey conducted by the South Africa Depression and Anxiety Group (SADAG), for example, the survey results revealed that 46% of South Africans are dealing with financial pressure, 55% with anxiety and 40% with depression. I am fairly confident that many other countries would present similar or even more serious statistics.

According to Alinda Nortje, Executive Chairperson and CEO of Free To Grow, financial problems do not only impact every facet of the lives of those affected, but also the organisations for which they work. It is estimated that a company loses two out of twenty days in production for every employee who suffers from financial problems. A financial wellness survey, conducted by Free To Grow over a period of five years, highlights that many employees struggle to handle even the most basic aspects of their personal finances. Of the 1 014 respondents:

• over 61% indicated that they were unable to budget effectively
• 79% of the respondents’ personal finances were impacting their stress levels negatively
• 69% reported that their physical health was impacted negatively by the state of their personal finances

While financial wellness is personal, its impact is not. A deficit of this type of wellness usually has a big impact on productivity and effectiveness at work. In Barclays’ “Financial Well-being: The last taboo in the workplace”, 2016, they note the negative impact on business as follows:

• Lost productivity impacts the bottom line by 4% as a result of the effect of employees worrying about their finances
• 5% of employees have been absent from work an average of 4.2 days a year due to illness caused by financial worries

As lockdown in many countries begins to ease, organisations have an ideal opportunity to assist their employees with taking greater ownership of their spending habits, making sense of their cents and also exploring what they can control to make ends meet. Nortje notes: “Feeling more in control of one’s personal finances has been shown to have a direct positive influence on anxiety, motivation, engagement and productivity”. Organisations should thus be addressing the following factors with their respective employees:

• Understanding the individual’s money personality and the role money plays in building a quality life
• Taking ownership of one’s financial affairs and learning to budget effectively
• Understanding credit and when and how to use it

As more and more people struggle with their finances, employers are in a unique position to improve the well-being and active contribution of their employees by enhancing their financial literacy. Financial literacy programmes can be valuable resources in employers’ toolkits that not only provide improved personal financial outcomes for employees, but also increase their morale, engagement and productivity.

Free To Grow offers the workshop, Money Sense, to empower individuals with financial literacy. To find out more, contact me on jonathan@ftgsa.co.za

Originally published at https://www.stretchforgrowth.com on September 20, 2020.