Financial education should be as important as learning A,B,C and 1,2,3
Learning the ABC’s and counting to 10 are part of everyone’s early education. But what about learning the value of money; how to save, what to save for and how to manage a budget? All of us use money on a daily basis, yet most South Africans do not learn how to work with money especially during the early stages of learning and development.
According to a study by the Organisation for Economic Co-operation and Development (OECD), South Africans’ level of financial competency is only 30%. This is also evident from, and perhaps one of the reasons why South Africa’s debt to income ratio is extremely high. According to the Reserve Bank, the debt to income ratio for the second quarter of 2018 was 71.3%.
According to Banie van Vollenhoven, Group CEO of Iemas Financial Services: “With the rising cost of consumer goods and the low expected economic growth rate of only 1.5%, it is not surprising that consumers are increasing their borrowing to pull them through. However, if an individual’s debt obligations to income ratio are more than 36%, then that person is probably not living within their means and would have to find a way to manage their finances better so that they do not become over-indebted”.
The best way to do this is to get back to basics and become financially savvy through financial education – something so important but often not taught at school or at home. “It is never too late to learn how to manage your money better and also to teach your children how to work with money from an early age by compiling a basic budget, saving every month and when they get older, to pay their debt on time. That is why we offer financial wellness workshops, at no cost at all to the employer organisations that we have agreements with,” says Maria Feiteira, Managing Executive of Financing at Iemas.
Iemas has agreements with some of South Africa’s biggest organisations spread throughout all provinces and covering all industries, to bring its financial products and solutions to employees’ place of work through workplace financing and giving employees the opportunity to become part of the Iemas business. “By taking up our products and services, individuals share in our profits through our annual rewards payment at the end of the year. Thus, in addition to financial wellness training, we also empower individuals by giving them the opportunity to become part of something bigger and share in our profits – putting the power in their hands,” says van Vollenhoven.
Financial education is not only an important personal investment that will help anyone to get their budget out of their head and into practice ensuring that financial obligations are met, but also about financial risk management which Iemas also advise and train on.
