Financial wellness is having an understanding of your financial situation and taking care of it
Financial problems and debt becoming a nightmare ?
Over-indebtedness is a common cause of physical and emotional ills, which lead to strains on personal and family life, as well as on productivity. The problem of over-indebtedness in South-Africa has taken such serious proportions that it needs to be addressed on a personal, organisational and governmental level. In June 2007 the National Credit Act of 2005 replaced the Usury Act, 1968, and the Credit Agreements Act, 1980; to become the umbrella legislation that controls credit in South Africa. Although the impact of the Act remains to be seen, it brings with it immediate and significant changes that could assist tremendously in our fight against over-indebtedness.
THE IMPACT OF THE CURRENT DEBT CLIMATE AND ECONOMIC STRESSORS
The current debt climate and economic stressors impact negatively, not only on individuals and families, but also on the working environment.
Financial problems are perceived as personal failures in a society that places high premium on success and possessions. Economic stress can have a negative psychological and social impact on individuals and families. There seems to be a correlation between economic stress and increased levels of anger, depression, anxiety, somatic complaints, poorer health and increased lowered self esteem. Quality of relationships can decline due to economic strain, disruption, increased financial disputes and discord, increased hostility and decreased emotional support.
The following effects are observed in the workplace:
- Severe stress
- Lack of concentration
- Decreased productivity
- Poor decision making
- Low morale and motivation
- Emotional outbursts, inter-personal conflict
- Constant lending
- Reckless spending.
FINANCIAL WELLNESS PROGRAMME: CASE STUDY RESULTS
Financial Wellness is a relatively new concept for South Africa. Research has shown that very few employers focus on financial matters when dealing with Employee Wellness.
BMW South Africa took the initiative to address indebtedness amongst workers within the automotive industry, and approached the German Development Corporation (GIZ) to become involved. GIZ agreed that there was a greater benefit in developing a comprehensive Financial Wellness Programme (FWP) for the Corporate sector, and undertook amongst other aspects, to finance the development of a system to measure and evaluate the FWP.
In light of the above, a public tender was published for a Service Provider to become involved in the development and implementation of a FWP for BMW South Africa. PROCARE was selected as the most suitable Service Provider due to our psycho-social expertise and practical experience in Employee Wellness counselling and Financial life skills in South African Companies over many years. The counselling process and progress status were monitored through the use of questionnaires, interviews and the obtaining of credit reports and other financial information.
Over a period of two years 199 employees at BMW took part in the Financial Wellness Programme and PROCARE achieved a total debt reduction of 57%; a 32% reduction in judgments and a 50% reduction in Creditors.
A HOLISTIC APPROACH TO FINANCIAL WELLNESS
We believe a holistic approach is the only way to overcome financial difficulties and sustain financial wellness in the long run. This is achieved by combining the psycho-social expertise of our Social workers with the financial expertise of Debt counsellors. The concept is based on the valid assumption that every person should be able to meet living expenses before they can pay other bills and that we need to look at spending behaviour to ensure lasting financial stability.