EAPASA’s Eduweb seminar on 4th May, “Preventing a Financial Crisis”, was well presented by Jean Archery who is a certified financial planner, accredited workplace coach, author and speaker. It was, in part, Jean’s personal experience in educating her daughter on money matters that led her to designing a financial wellness programme that embraces both money IQ and EQ. “Money IQ” means being financially literate and having money skills, while Money EQ is about the beliefs and thoughts people have about money that leads to their money behaviour.
Jean posed this question to attendees: “In hindsight, what would you have done differently to protect your family, business and money from the financial effects of the pandemic and lockdown?”
Here is an extract from her presentation that provides the answer:
Current challenges employers face
Even before the issues of the pandemic, employers faced many challenges. Then, to make matters worse, the advent of the COVID-19 lockdown forced businesses that did not have a contingency plan in place, or who were unable to work from home, to close their doors or retrench staff.
What financial issues prevail in South Africa?
- Rampant unemployment
- A poor savings culture
- Many affected people withdrew from their pension savings to live on during COVID-19
- Poor financial literacy rates – it is not a school subject and many parents do not have the knowledge or skills to educate their children
- Many people are living beyond their means
- Bread winners are currently among the “sandwich generation”
- Many South African are subject to Black Tax
Who needs to do something about it?
This responsibility lies with each and every one of us because money is at the core of what we do. Financial stress affects every single one of us – it has negative implications for ourselves, our family, businesses and clients.
The impact of financial stress on employees
In a US research survey, 40% of US employee-participants admitted to being stressed about money. Experiencing financial problems causes the following negative
- fatigue and loss of sleep;
- arguments, anxiety, divorce and sometimes even suicide;
- loss of productivity;
- depletion of emergency funds;
This research revealed one positive impact – 46% of the US survey respondents are saving more and spending less since the pandemic.
How does employee financial stress impact employers?
Employee financial stress definitely negatively impacts employers. Employees spend between 13 – 20 hours a month worrying about finances. 88 per cent of employees surveyed said that the pandemic had caused financial issues. Here are their top ten stressors:
- Enough emergency savings
- Job security
- Income fluctuation
- Paying rent or mortgage
- Financial market volatility
- Reducing their credit card
- Retirement savings
- Health care bills
- Delaying major financial decisions
When surveying financial wellness, 53 per cent of the participants said they were financially stressed, 56 per cent reported that this interferes with their work and 83 per cent reported that financial benefits are critical to their financial health.
Paving the way to the future
Understanding the four Ds will help you to plan better – and help your employees to plan better. What would it mean for you and your family, financially, if any of these things happened in the near future? Any of them could lead to a financial crisis. They are:
In the event of the death of a spouse or partner, even if they were a stay at home parent, there would be serious financial ramifications to their passing away in the form of financial costs. For example, one may need to hire a nanny to take care of your children while you are at work in the event of a spouse’s death.
Ask yourself these questions when scenario planning for death:
- Do I have enough life cover in place? And how do you know it is sufficient?
- What income will my family require to continue to survive?
- What will happen to my assets?
- Are there any fees or costs related to my death, such as debts or taxes?
- Will they have sufficient cash available to pay for funeral expenses – and do they have easy access to your financial records?
- Is there anything else I need to do or have in place to reduce the emotional and financial impact of my death?
In the event of disability, you may experience loss of income or incur costs that deplete your resources.
This is any event that requires you to withdraw money from savings. Retirement falls into this category of having to deplete your savings as you need retirement income.
No one plans to divorce. When it happens, it can have a dire financial effect.
How can you help employees to prepare for the four Ds?
- Explain employee benefits and statutory leave benefits
- Ask the help of your employee benefits provider to speak to your employees to ease their concerns about market performance
- Encourage them to seek financial advice
- Promote financial education
- Hold a wills day
- Educate them in budget creation and encourage them to build or rebuild savings
- Educate them on the necessity to manage debt
- Equip them to protect themselves against fraud
- Teach them how to work responsibly with credit
If you missed this valuable seminar, and to find out how to download Jean Archery’s workbook that will help you scenario plan for all four of the dreaded Ds, click here to watch it on EAPASA’s Facebook page.
Financial Wellness Coach/Author/Founder @Money Messages
Jean Archary is an author, speaker, CERTIFIED FINANCIAL PLANNER® and accredited workplace coach with over twenty years’ experience within financial services. Her exposure to coaching, psychology and financial planning led to the design of a financial wellness program that considers both sides of money (IQ) and (EQ).