FINANCIAL WELLNESS · 37 School Fees - cash loans / Buy a car 45 More School Fees Loans / Buy a Car...
Transcript of FINANCIAL WELLNESS · 37 School Fees - cash loans / Buy a car 45 More School Fees Loans / Buy a Car...
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?