FINANCIAL WELLNESS

FUND YOUR FUTURE

What is financial wellness?

❖ Financial wellness results from making informed

short- and long-term financial decisions that result

in optimal health, productivity, and a solid

foundation for every stage in life.

❖ A state where financial stress is gone, replaced by

actions that support well thought out goals.

❖ In short, you mindfully manage your money, instead

of your money managing you.

Why Financial wellness?

❖ Financial issues affect us more than physical illnesses

combined

❖ More than half of SA’s workforce lives on salary to

salary

❖ Many people save very little money, if any

❖ Living salary to salary and failing to save money

may result to high stress levels

❖ A lack of basic financial understanding, leads to

poor choices when money is used

The role of the employer

Should the employer get involved

Commit to financial well-being

Offer varied topics and methods

Target programs to employee needs

Offer financial counselling

The impact

Large outstanding debts and an

unstable financial situation has been

found to cause:

Ulcers

Digestive problems

Migrane and other headaches

Depression and stress

Heart attacks

Impact to the employer

Stress resulting in lost productivity

Absenteeism or health issues

Lack of concentration

Accidents at work

Resignations to access pension benefit

Theft

The Principles of Money

❖ Don’t spend if you don’t have to – NEED or WANT?

❖ Save regularly at least10% of your earnings

❖ Never buy something on credit unless -a house

❖ Always pay cash for goods

❖ Buy assets not liabilities – e.g a house

❖ Do not make loans for personal use- you are not a

business

❖ Live within your means, watch the media effect.

❖ Take care of what you have. Wear it out, do it

yourself, budget, get it for less, buy used goods.

Stats – Facts

❖ SA is a buy now pay later society

❖ Proportion of household debt to disposable income

60%

❖ 6% of SA can afford to retire

❖ 4% Business 14% Education 11% Housing

❖ 24% Appliances/ Furniture 7% Pension

❖ 26% Other

Life Stages and your Money

➢ 20 Start working – savings /buy a car

➢ 22 Rent a place / car – erode saving

➢ 25 Entertainment – no Savings

➢ 30 Get married– with a loan buy a car

➢ 31 First child - rising expenses

➢ 33 Buy a townhouse – salary shrink /

buy a car

➢ 35 Second child - More expenses

➢ 36 Buy a house - Creche / nanny

…Life stages continued

❖ 36 Buy a house - crèche

❖ 37 School Fees - cash loans / Buy a car

❖ 45 More School Fees Loans / Buy a Car

❖ 50 Tertiary Education -Broke

❖ 55 Retirement - Little Money Stress Related

❖ 60 Retire - Pension Only / Buy a car

❖ 63 Retire – Can’t afford Medical Aid

Solution:

SAVE FROM YOUR 1ST SALARY AND NEVER STOP

The Risks

Car Insurance

Property Insurance

Disability cover

Life cover, Funeral, Will

Medical Aid / Traditional healer

Do We Need Financial Education?

❖ Knowledge

❖ Skills

❖ Attitudes

For anyone who makes decisions about:

Earning Spending Investing

Saving Borrowing

Good money management

behaviors

SAVINGS

❖ Bank - interest

❖ Stokvel – 0%

❖ Endowment Policies – 5 yrs

Pension Fund – 40 Years

❖ Unit Trust / ETF/ Shares

❖ Emergency fund

❖ Social activity

❖ Tax free investment

❖ Retirement plan

❖ Short Medium Long

Product Goal

Savings plan 15

Savings GoalTotal Cost of

itemDuration Amount to save each week

Short-term

Long-term

Tip: To decide the amount to save every week, divide the total amount of money you need by the

number of days, weeks or months between now and when you want to reach your savings goal.

Amount to save ÷ Number of (days/weeks/months) = Amount to save each

(day/week/month) to meet a savings goal

CONCEPT OF SAVINGS

Putting money aside

is the key to being

wise about money.

“Putting money aside”

is saving.

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What is a budget?

A Budget is a summary of estimated income and how it will be

spent over a period of time.

18

MY BUDGET our BUDGETMONEY IN (income) Amount

Salary

Business

Others

TOTAL

MONEY OUT (expenses)

Transport, Clothing,

Rent, Rates, Water, Electricity

Food, Intertainment

TOTAL

SAVINGS

+ Surplus / - Deficit =

(Money In – Money Out)

LIVING WITHIN MY MEANS

Need: A basic necessity you

cannot do without. These things

are necessary for our survival.

Want: Something optional,

or not needed for everyday

survival. These are things that

we want, and when we buy

them, we are happy

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Why do we borrow money?

❖ To invest

❖ To respond to an unexpected emergency

❖ To consume

❖ To pay debts

Are these good reasons why we borrow?

LOANS COST MONEY AND MAKE US SPENT MORE

*USE YOUR OWN MONEY*

20

Retirement Planning

❖ Evaluate your current savings plan to make sure

whether it will allow you to retire at the desired

age

❖ The employer pension fund is never enough

❖ The Income gap

❖ 40 yrs service 20% Income drop =R10 000 /8000

❖ 30 yrs service 40% Income drop =R10 000/6000

❖ 20 yrs service 60% Income drop =R10 000/4000

At Retirement

➢ Pension Benefit – ENOUGH?

➢ Debts – HOW LOW ------?

➢ Savings / Investment HOW HIGH ++++?

➢ Medical Aid - CAN YOU AFFORD ONE?

➢ Assets – CAN YOU LIQUIDATE FOR EXTRA CASH?

➢ Family – CAN YOU SHARE WITH THE CHILDREN?

➢ Home – CHEAPER PLACE?

➢ Funeral – COVERED?

Estate Planning

❖ The Last Will and Testament

❖ Everyone with assets should have

❖ a will to protect your loved ones

❖ Provision for death should include:

- Estate duty tax

- Executors fees

- Capital gains tax

- Income tax

Approximately 86% of South Africans do not have a will