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Does Numeracy Affect Your Financial Well-being?

November 3, 2022

The cost-of-living crisis has contributed to a staggering amount of financial stress. As a result, people now want their employers to focus as much on financial well-being as on mental and physical health. As employers now urgently turn to financial wellness programs to support their employees. A recent report exposed a hidden but severe barrier to achieving positive financial well-being in the workplace: low numeracy skills plague workforces worldwide.

What is financial well-being?

Financial well-being is about much more than having enough money in your bank account to cover the bills. It’s about understanding how your financial decisions affect your life and how you can use your money to achieve your life goals. It’s about being confident in your money management skills, no matter what stage of life you’re at and what stage of your financial journey and understanding your options when managing your finances. Financial well-being is also about being resilient and having the right tools if things don’t go as planned. It’s about surrounding yourself with people who support you and help you make intelligent decisions with your money.

Numeracy and your financial well-being

Financial literacy is a broad concept; although it’s only one aspect of literacy, it can impact your economic well-being. A lack of numeracy could lead to other financial issues, such as adopting a sub-optimal insurance plan or failing to understand a financial product’s terms and conditions, which could knock your financial well-being.

Numeracy is essential in risk assessment, such as assessing the risk of default on a loan and the risk associated with a particular investment. Suppose you have difficulty evaluating the riskiness of certain financial products. In that case, you may be more likely to take on too much risk and end up with a sub-optimal financial portfolio and reduced financial well-being.

The problem with poor numeracy and financial well-being

A major problem with poor numeracy and financial well-being is that it may lead you to make poor decisions and end up with a sub-optimal financial portfolio. This could leave you short of money during important life events, such as retirement or emergencies, and reduce your financial well-being. Numeracy is critical concerning risk assessment. If you don’t fully understand the terms and conditions of a financial product, you might mistakenly think it’s less risky than it is, making it more likely that you’ll select it. If you change circumstances, the product may no longer suit your situation, leading to further financial difficulties and reducing your economic well-being.

How can you increase your financial numeracy?

If you have poor financial numeracy, the first step is identifying and dealing with the root cause. Are you not practising enough, or do you have an underlying problem that needs addressing, such as dyscalculia? You can quickly increase your numeracy skills by practising more if it’s the former. You can find numeracy resources online, take part in online quizzes, or join a local money management club. If you have dyscalculia, this disorder impairs your ability to use numbers and calculations, even if you’ve practised a lot. It’s estimated that anywhere between 2% and 5% of the population have dyscalculia, and it can affect people of all ages, although it’s more common in children and young adults.

Conclusion

Financial decision-making does not only consist of possessing financial terminology. It also involves mathematical calculations. Therefore, low numeracy levels contribute to various undesirable outcomes concerning personal financial well-being and the economy. According to a case study, low numeracy is associated with a 4.8% reduction in financial literacy, while a high level of numeracy is associated with a 5.6% incre

Help Employees Set Their Budgets and Help Your Business Grow

June 24, 2022

As an employer, one of your key roles is to help your employees develop their unique strengths and interests within their respective roles. An additional part of prioritising is to assist employees in setting personal financial goals and developing relevant plans to help you and your employees stay focused and on track.

Regularly assisting employees set goals builds their engagement with you as an employer and boosts their productivity.

To reap the rewards of assisting employees, here are some ways employers can help employees create a fully comprehensive budget for 2022 and improve their financial literacy.

Show employees how they can have an impact.

Very few of us can afford a large financial purchase with a once-off payment, nor can we operate in today’s economic climate without keeping our spending in check. For reasons like these, we need to help employees figure out how they can achieve their financial objectives. They can do this by creating a budget (a financial roadmap) to tell them where they started, where they are, and where they are going.

SmartAdvance informs employees that the budget tells us if we can afford to buy wish list items or if we need that money to cover fixed expenses. It also helps us achieve financial freedom by saving for a financially healthy retirement and helps to prepare for potential emergencies.

Putting a personal budget in place helps create some sense of financial stability and can be implemented by following the below simple steps:

Step 1: Know where you are

It is essential that you write down the following; how much and how often does your money come in, and how often are you spending. The more comprehensive this list is, the more effective your budget will be.

Step 2: Categories

Both income and expenses can be fixed or variable and regular or irregular. Separate your income and expenses into the respective categories.

Step 3: Capture

Capture all your Budgeted income and expenses onto a spreadsheet/template. Remember to separate them into fixed, variable, regular and irregular income and expenses.

Step 4: Calculate budgeted amounts

Having the total amount of your income and expenses will enable you to calculate what you will have left or not be able to pay at the end of the budgeted period. This helps you understand what you can or cannot afford, where you can save money and what is happening to your money.

Step 5: Record and monitor actual amounts

Monitor your actual expenses for the period in question. You will need to separate your expenses into various categories at the end of the period to calculate how much you spent. This total is then captured under the actual column on your budget spreadsheet/template.

Step 6: Calculate variance (difference)

Calculate the difference between your budgeted amount and the actual amount for each income and expense category. This difference is called the “variance”. There are only three outcomes to this calculation. You have little to no variance, negative, or positive variance.

Step 7: Update and repeat

Repeat the process the next time.

Employers should refrain from creating goals for employees. They can dictate the objective but not the goal. It’s best if employees come up with the goals themselves.

Help employees reach their goals.

When you partner with SmartAdvance, you assist your employees in setting their budget, and we take them through the process step by step.

For employees to successfully implement a budget, they must articulate what they hope to achieve with their budget so that we can assist them in setting SMART goals to make creating a successful budget possible.

Employees need to understand that these goals are for themselves and not solely to improve their productivity at work. Employees need to know what’s in it for them, so we discuss the below with them:

How the goal impacts them personally.
How the goal aligns with their passions and career path.
The knowledge and skills they can develop while pursuing the goal.

Helping them helps you.

Succeeding as an organisation requires business skills, decision-making, and, most importantly, happy employees. Employees need to perform within the organisation and create value. In return, a company should assist them with essential matters such as budgeting and financial wellness.

Budgeting is one of the essential skills to master. This requires a company to partner with a financial wellness provider that can provide training programs that equip employees with the financial literacy needed to address their changing financial needs. Implementing employee wellness programs that encompass benefits – such as financial training and financial assistance – is excellent for recruitment and employee retention and translates into crucial metrics such as improving productivity and profits.

Not only does it help you improve productivity, but more importantly, it has a positive impact on company morale which has become a central focal point for employers in this post-pandemic world. Employees who have access to financial wellness benefits are more likely to have high confidence than those who don’t. Employers who offer such solutions to their teams have employees who report less stress.

The SmartAdvance Wellness Ecosystem makes better employees.

May 30, 2022

Financial wellness is a topic that increasingly pops up amongst employers. With most employees being stressed and worrying about their finances at work, it’s not hard to see why.

In this article, we’ll look at employee financial wellness, what a financial wellness program looks like, what the potential benefits are, and what you can expect when partnering with SmartAdvance.

Prevent employees from falling into a debt-trap

The focus of a financial wellness program is often on reducing debt, but another approach can be to help staff avoid debt altogether. Usually, debt reduction solutions lessen the financial burden, but the stress remains. This is where wage streaming is different since it helps staff avoid debt in the first place.

Wage streaming allows employees to stream some of their earned wages. It is directly deposited into their bank account, assisting them when they need it most to avoid bills and expenses putting them into debt.

An additional focal point of financial wellness programs is financial education and training. Financially literate employees manage their money with more confidence and have a better chance of handling the inevitable ups and downs of their financial lives and how to address any issues that may arise.

This helps employees navigate the pitfalls of debt by creating an understanding of it. This includes the benefits of repaying and avoiding debt. This enables employees to seek out the lowest interest rates when applying for loans and pay off credit card balances each month to avoid interest charges. If they have already accrued such debt, they will be able to select the best methods to get out of debt.

Financial education will also teach employees to protect themselves from debt and bankruptcy by creating an emergency fund to fall back on when unexpected expenses arise.

Enhance financial wellness within the formally employed

Partnering with financial wellness providers, such as SmartAdvance, allows your company to enhance the financial well-being of your employees by providing a selection of low-risk credit options and financial education/training.

Due to the ongoing pandemic, there are tremendous challenges within the workplace that frequently affect employee productivity and morale, resulting in financial stress. Fortunately, employers now have the option to minimise the stress of employees.

Suppose wage streaming does not cover the expenses that confront employees. In that case, SmartAdvance gives employees the option of using low-risk credit by giving them access to our array of financial products:

Rehabilitation loans – R50 000 over 36 months to provide the means to clear all debt, clear judgements and debt review and lead you to a path of financial freedom.
Education/Training – Provide training on various financial topics to educate customers and improve financial stability.
Personal loans – Customers can access safe and affordable finance for up to R30 000 over 30 months for essential expenses.
Developmental credit – Supporting local communities by building their dream home.

Providing secured payroll deduction loans which significantly reduce employees’ monthly debt

Payroll deduction loans are only available to employees of companies partnered with SmartAdvance. This product aims for over-indebted employees to gain control over their debt and give all employees the relevant tools to manage their money better.

Based on the terms of the agreement employees sign when taking out a loan with SmartAdvance, we submit all necessary information to your company’s HR department to deduct the instalment directly from an employee’s salary and have it paid to SmartAdvance.

Below are the employee benefits of a payroll deduction loan:

They are protected. By law, an employer has to make sure that debt repayments do not exceed 25% of an employee’s gross pay.
They save. There are no bank charges involved in a payroll deduction.
Convenience. Employees don’t have to make any special arrangements to repay their loans – the instalments are deducted automatically. With SmartAdvance sales staff on-site, it is also easy for you to do business with us and have your questions answered and problems resolved.
Cheaper credit. The agreement between SmartAdvance and an employer guarantees an employee a lower interest rate on their loan.

Below are the employer benefits of a payroll deduction loan:

Employees who are not worried about money are more productive and less likely to make mistakes and break safety rules.
Better employer-employee relationships.
Gaining a reputation as a responsible, caring employer.

Create happier, healthier, and more productive employees

Let’s look at the employee benefits of implementing a financial wellness program throughout your company:

Reduce mental stress

Financial stress results in absenteeism and tardiness amongst employees. Providing employees with the necessary financial products and education can help alleviate this burden. Furthermore, these programs reduce employee stress levels and increase their overall health by providing them with the tools they need to take control of their finances.

Increase in employee satisfaction

Employees who have access to financial wellness programs have reported greater professional satisfaction. Programs let them set and achieve personal financial goals, including building an emergency fund, upgrading their homes, and much more.

An employee prepared for unexpected financial emergencies can engage more at work. This is because they do not have to worry about their long-term finances.

Increase in leave days

Employees who worry about money miss two more days per year than their unstressed colleagues.

Financial wellness programs offer many free resources to help employees during the workday. Whether it’s financial education classes, career coaching, or benefit programs, financial wellness programs help employees reduce finance-related health symptoms. Instead of sitting in a doctor’s office for long periods, less stressed employees can use their leave days for relaxation and rejuvenation.

It is not only employees that gain benefits from financial wellness programs. Employers do as well, and below are some of the benefits that you as an employer can expect:

Increased productivity

Employees whose financial pressure increased due to the pandemic are more likely to admit that their finances are a distraction at work.

Luckily, financial wellness programs can provide employees with alternatives to stressing over their finances. Financial education courses, benefit funds, and financial aid products can alleviate employees’ money worries. Thereby, productivity increases and your organisation will be able to thrive as you reduce these types of stresses.

Reduce absenteeism

Financial stress results in a 34% increase in absenteeism and tardiness, according to research from Society for Human Resource Management.

Money-related stress can also lead to increased presenteeism; employees come to work despite being physically or mentally unwell. While it may seem less harmful, presenteeism seriously affects organisations and can cost them a lot of money. Companies save on labour expenses when employees aren’t missing work due to their financial stress.

If you are one of the growing numbers of employers launching financial wellness programs for employees to enhance the bottom line of your company and improve the lives of your employees, get into contact with SmartAdvance to find out how we can get you started.

Email us: [email protected]

Phone us: +27 12 045 0606

We need to talk about Christmas.

December 7, 2021

For most Christmas is, unfortunately, the most expensive time of the year. A recent study conducted by Wonga SA has revealed that South Africans spend an average of R5 706 EACH over the festive season. The chances of us overspending this festive season are even higher after the tough year we faced thanks to the pandemic. This might be the only chance some of us get to see our family this year, so the urge to spoil them is stronger than usual.

This is why, more than ever, it’s important that we talk to our family and loved ones about the cost of Christmas.

Talk to your loved ones

We want to spoil our loved ones during Christmas, this is a tradition that most of us fall prey to. The problem is the extent we go to.

Work out how much you can spend on each of your loved ones, a budget that won’t lead you into financial trouble, and talk to the people you plan on giving gifts to about how much you will be able to spend.

We know that many of us is probably too embarrassed to chat about this. It’s important to remember that many of us are struggling this December and if you splurge on gifts others might feel the pressure to do the same for you.

Remember that Christmas is not about what you can buy, it’s more important that you are able to spend valuable time with loved ones.

Make a budget and stick to it

With the possibility of a harsher lockdown during Christmas, we aren’t sure whether we’ll be able to spend the season with anyone other than our immediate household and this makes budgeting difficult.

Even though planning might be trickier, it remains important that we at least try to create a Christmas budget. To begin, make a list of family members and friends that you will be buying a gift for and how much you will spend on each of them.

If you are hosting a dinner, plan how many people will be coming over and how much you will be spending on food and drink. Consider asking everyone who comes over to contribute to the dinner, whether it’s drinks or a salad, each bit helps.

Most importantly once you have your budget stick to it!

Look for cheaper alternatives

Don’t be afraid to hunt on bidorbuy or at Cash Crusaders for good-as-new second-hand gifts. If you’re good with your hands, a handmade gift is thoughtful and doesn’t need to be expensive. Or maybe you’re a pro at baking and have the skills, bake amazing treats for family and friends.

Cheap or even free does not mean that thought didn’t go into it.

Final thoughts

Sometimes, no matter how careful you are and no matter how hard you try to plan the festive season might throw unexpected expenses your way. If you need help to get through the festive season, reach out to SmartAdvance so that we can help you take care of the necessities.

5 Ways to Avoid Overspending on Black Friday

November 25, 2021

Want to curb that Black Friday empty bank account blues? We know that holiday shopping can be stressful. The season brings financial pressures, which includes saving enough for all the gifts you want to buy and struggling to stick to your budget.

We are not alone in this, in fact 76% of South Africans overspend over the festive season with the average South African expecting to spend over R6 500 on Christmas alone. The financial strain we are left under after the festive season is anything but jolly.

But there are some easy strategies you can employ during those tempting Black Friday sales to limit your overspending.

Set Spending Limits

Secret Santa or gift exchanges are known to impose limits on how much we’re allowed to spend per person. But we can do the same with friends and family.

We shouldn’t be afraid to set limits and make them known. Be open with talking with friends and family and come up with an amount that suits everybody’s budget. Or set your own budgets and let your people know in advance what you’re planning to do this holiday.

Know Your Spending Triggers

There are many reasons we overspend, but we can control our spending by identifying what causes us to shop on impulse and buy needless things. For example, many of us can’t resist a sale. But just because something is on sale doesn’t necessarily mean that we are saving money.

For example, be careful of “buy more, save more”. The tactic is to make us think that there is better value when there is R100, R200 or R500 off, but it is the same discount percent so don’t let that claim make you spend more.

Have a Game Plan

It’s important that we take the time to do our homework before we head to the shops, online or physical, this black Friday. Retailers generally release their ads in advance, so be sure to compare the advertised prices and promotions.

But we know that sometimes you just want to know whether something is a good deal or not. SO have a look at this Black Friday calculator. You plug in the type of promotion, the original price and the discount and the calculator will tell you if the deal is worth considering.

After you have calculated the worthiness of those Black Friday deals, create a list of gifts you want to buy from each retailer, which saves you time and money. Be sure to have back-up gifts planned, so if the chosen gift is out of stock, you don’t waste time scrambling at the last minute and overspending.

Track Your Spending

It can be very easy for us to get caught up in the ongoing sales of Black Friday, that is what makes it so important to monitor your spending. Watch all of your purchases and don’t get caught up in the thrill of all the deals.

You can do this by checking your credit card and debit card transactions or using an app like 22seven, which links to all your bank accounts and send you purchase and budget alerts.

Keep track of all the Christmas gifts/Black Friday purchases you’ve made on a list and stick it on your fridge, seeing the numbers help you make better buying decisions because it holds us accountable.

Final thoughts

With the holiday season coming up, we know that it might not be possible to get through it without some help. If you are looking for responsible loan options, apply for a SmartAdvance loan today

How SmartAdvance Boosts Employee Financial Wellness

October 25, 2021

Covid-19 has impacted the way that many employers approach employee wellbeing. Businesses have started to reconsider the importance they place on the financial wellbeing of their employees after the significant financial strain they have been placed under for the past year and a half. Financial wellbeing programs are no longer an added benefit but a necessity for an engaged and productive workforce.

To put this is context, 89% of employees in South Africa are concerned about their ability to pay their bills. Additionally, 80% of employees are unable to make it to the end of the month. The level of stress these places employees under is monumental and minimizes their ability to prioritise anything other than survival. Ultimately this results in 20% of employee absenteeism being a result of financial stress. Figures like these severely decrease company revenue because of the decline in overall productivity.

Not having a financial wellness program means as an employer you are spending a significant portion of your workday on time consuming admin. Worse, it means employees do not have access to financial protection and insurance which prevents them from becoming over-indebted and going to unreliable credit providers. Ultimately what this leads to is a workforce that is snowed under by financial stress which adversely affects their productivity.

Partnering with a financial wellness provider such as SmartAdvance helps you oversee the entire employee wellness journey which includes everything from payroll services to developmental credit.

SmartAdvance provides a holistic employee wellness solution:

Payroll services

Finclusion has recently announced the acquisition of a strategic stake in HelloHR, a South African payroll software startup. What this means for SmartAdvance clients is that they now have access to a holistic financial wellness product. This acquisition grants SmartAdvance clients access to payroll services which includes the automation of the necessary leave and tax adjustments. Meaning that clients save time and reduce the chance of human error.

Wage streaming

This allows employees to access to a small portion of their earned wages at an earlier date. This gives employees a responsible alternative to taking out a loan from a unreliable lender by giving them the more the option of access to their own wages at an affordable flat rate.

Rehabilitation loans

Give employees the opportunity to improve their credit rating by giving them access to rehabilitation loans. They have the option of getting a loan of up to R50 000 over 36 months so that they can improve credit rating and improve monthly savings.

Developmental credit

Your employees have access to developmental credit which helps them build, expand or improve low-cost housing, thereby helping them improve the community in which they find themselves.

Behind the Scenes

Making all of this possible is the amazing SmartAdvance team that is supported by the Country Head, Gerrie Fourie.

Gerrie spent almost 10 years starting and managing various finance companies throughout Africa. He started his journey with the Finclusion Group in June 2020, ultimately taking on the role of SmartAdvance Country Head in April 2020.

He was brought in to oversee the successful implementation and managing of all SmartAdvance operations.

Currently he is tasked with aligning the SmartAdvance strategy with that of the Finclusion Group. This strategy alignment is vital as they have recently received funding and now the responsibility is on him to deploy it and guarantee it is dispersed to the necessary departments.

“Business development is a top priority, because we cannot afford to not move forward. Just because we are successful today does not guarantee it tomorrow.”

Forward momentum is also driven by strategic partnerships, which Gerrie helps forge and nurture.

“If you want to increase your expertise and resources, create predictable revenue streams and provide incremental lift to sales and revenue, all while keeping acquisition costs down then your ability to solidify strategic partnerships is priceless.”

Day-to-day he is responsible for SmartAdvance’s staff management and reporting. Staff management is a lot easier as face-to-face communication is possible once again as more employees are returning to the office as lockdown regulations are eased.

He is trying to ease the transition back to the office by aligning company culture with the long-term goals of employees and SmartAdvance. He has also busy with tech enhancements which will greatly benefit the success of his employees.

If you are ready to looking after the wellbeing of your employees, get in touch with us to discuss partnering with SmartAdvance.

Financial Well-Being in the Workplace

October 1, 2021

Money concerns is not a topic that employees like to discuss at work, so it may not be apparent to an employer when their employees experience financial distress.

Employers can take the time and effort to identify when money concerns affect their employees, so that they can offer resources to help.

Signs of Financial Distress

Even though employees seldomly disclose when they are in financial distress, below are signs that could indicate that an employee could use assistance:

Requesting an advance on a paycheck
Being mentally distracted during work
Spending more time on phone calls
Showing up late or other attendance issues
Avoiding social occasions with co-workers, such as going out to lunch
Choosing not to participate in a retirement plan

Four Elements of Financial Well-Being

Financial well-being comes when people feel secure about their money and that they have the freedom to spend their money how they’d like. Individuals should review their financial well-being from four different perspectives:

1. Feeling In Control of Daily and Monthly Finances

A key aspect to feeling financially secure having enough financial resources to meet your day-to-day and month-to-month expenses. The focus here is on meeting your present expenses. This keeps you in control of your expenses, rather than expenses being in control of you.

2. Capacity To Absorb a Financial Shock

Life is full of unforeseen circumstances and part of your financial well-being is having enough financial resources to absorb the costs of such circumstances.

With this element the focus of financial well-being shifts from being able to control your present expenses to focusing on the future and emphasizes the ability to cover emergencies.

Emergencies pose great threat to a person’s financial stability and therefore needs to be adequately planned for.

3. On Track to Meet Financial Goals

Another important aspect of financial well-being is to be on track to meet your financial goals. Achieving financial wellness means you do not derail from the goals and targets that you set for yourself.

Once you have achieved your short-term goals, like establishing a budget or creating an emergency fund, you should start working toward mid-term financial goals such as, paying off student loans. Lastly you want to concentrate on achieving long-term financial goals such as striving for homeownership or increasing your retirement savings.

You probably won’t make perfect, linear progress toward achieving any of your goals, but the important thing is not to be perfect but to be consistent.

4. Financial Freedom to Make Choices to Enjoy Life

The final aspect of financial well-being is having the freedom to make choices regarding the use of your financial resources to enjoy life. Amanda of Dream beyond Debt, captured this fact by defining financial security as “the ability to spend money on what I want, and not on what’s available or what I can get the lowest price because that’s all I can afford”.

Financial Freedom is about living within your means, being a bit frugal, and making sure that money is spent on things you really need like food, shelter, and even vacations (relaxation is important too).