Given the dismal economic quagmire we currently find ourselves in, should National Savings Month be cancelled this year?
Not necessarily, says Simon Ward, founder and CEO of Floatpays, who points out that South Africans were already in an extremely tight financial spot before globally rising food and energy costs and unprecedented inflation.
“The recent Floatpays State of Employee Wellbeing Barometer found that most South African employees are financially stressed. Seventy-four percent of respondents rated their financial stress level as medium to high. Almost one in five employee respondents acknowledged that they were highly stressed,” he says.
The inaugural study drew on both qualitative and quantitative methodology to survey South African workers who represent a broad demographic in terms of age, gender, ethnicity, province and monthly household income. The study positions employee wellbeing programmes as a catalyst for change in the country’s labour productivity trajectory.
And, according to Ward, the research shows that it’s the ordinary, everyday expenses that are the main cause of financial stress – transport, household costs, food and rent.
So is it tone deaf to ask people to save when we’re barely making ends meet?
Ward says not entirely – if we rethink how to save in an environment like this one. “Times are extremely tough with record inflation levels and ever-rising living costs. These are all reasons that make saving difficult, but the current financial situation actually has an upside for saving. Interest rate hikes are bad for credit but good for savings that accrue interest.”
He points out that savings contributions can be temporarily paused and still earn interest, and that the key is to get back to good financial basics. “We need to focus on reprioritising our budgets, and reducing reliance on ‘easy credit’ such as payday loans.”
Employers can practically support employees to do this with a new generation of financial wellness benefits enabled by technology.
“Interestingly, our Floatpays State of Employee Wellbeing Barometer found that having a level of debt one can cope with (68%) and having immediate access to wages (64%) came in the top four useful ways to improve financial stress,” says Ward.
While the ability to tap into wages as needed may seem counter-intuitive to saving, global trends reveal that employees who are paid more frequently or have greater access to their accrued wages can cover expenses faster and get ahead in paying off loans.
“An additional independent study we did that assessed the financial impact of Earned Wage Access (EWA) on customers found that EWA contributes to debt reduction by reducing the employees’ reliance on high-cost, high-risk alternatives such as credit cards, overdrafts, payday loans, and informal lending (mashonisas).”
Ward emphasises that employers can help employees to understand that in these times good financial behaviour is still possible and employers can go a step further in enabling it. He adds that it makes good business sense to do so.
“85% of employee respondents in our study said that they would be more productive at work with employer financial wellbeing support. Giving employees the tools even just to reduce their debt in such tough times can bolster one’s ability to save when the environment allows once again.”