FINANCIAL HEALTH

Many South Africans are in a bad financial position. Their financial health is in a detrimental state. Because they’re trying to survive while being over-indebted. They're spending all or more than their income while working long hours and worrying about finances, which has a detrimental effect on their state of mind.

Insight into consumer financial health: A dive into the complexities of what builds it and its influence on mental well-being are highlighted in the inaugural NedFinHealth Monitor 2023 report, which was unveiled recently by Nedbank in Johannesburg and followed by a panel discussion.

Frank Magwegwe, Nedbank's executive for financial wellness and advisory:  It stated that the study tailored research from the Financial Health Network—a think-tank that collaborates with several American universities—by drawing insights from a nationwide reflective study of 1,503 South Africans to reflect their current reality, ambitions, and challenges as they strive to improve their financial health status.

The NedFinHealth Monitor delves deeply into the complexities of what financial health implies for the country and what motivates it. It also demonstrates the pathway to a more financially secure future for all South Africans, according to Magwegwe.

The study focused on four major indicators of financial health:
Spending (how money is managed relative to income and living within one's means),
Saving (to protect against short-term and long-term financial shocks), borrowing (how well debt is managed and controlled), and
Planning (whether individuals make it a habit to plan for current and future financial activities).

According to the research: 

South Africa's financial health score is 53:  Which is slightly over the midpoint, indicating that, while there is a solid foundation for financial health, a sizable section of the population might benefit from improved skills, behaviours, and habits.

A total of 62% of respondents said: Their expenditure equals or exceeds their income.

Changes in income and expenses force some respondents to spend more than they earn. Thirty-five percent of South Africans believe their income has decreased during the last year. According to the research, 76% of South Africans feel their expenses have increased in the last 12 months.

When expenditure exceeds income:  South Africans primarily rely on credit to make ends meet, both regulated credit (credit cards, payday loans, and personal loans) and informal debt (borrowing from family and friends and loan sharks).

In the previous 12 months, 37% of respondents had taken out a payday loan, while 30% had accessed their earned wages/salary ahead of their due date.

Lack of emergency savings
When it comes to savings, most people do not have enough money for emergencies or to pay their living expenses for at least three months. Only 14% of South Africans are relatively confident, with 11% highly certain that they will reach their long-term financial goals.

A large percentage of South Africans are failing to meet their debt responsibilities.  42% of respondents across income levels said they were unable to manage their debt. Only 16% report having no debt.

Unsustainable debts are:  Having an enormous effect on the mental well-being of 67% of South Africans who remain anxious about their personal debt, according to the survey.

49% of respondents:  Felt it was acceptable to rely on credit to pay for everyday necessities such as groceries, clothing, furniture, appliances, electricity, and water.

Furthermore, Magwegwe stated:  That the survey found a correlation between physical and financial health and that as evaluations of physical health improve from poor to excellent, so do financial health scores.

Those who described their physical health as bad made up 1% of the sample, and they had a significantly lower financial health score of 35 than any other category. In contrast, those participants who ranked their physical health as excellent comprised 20% of respondents with the highest average financial health score of 61.

He stated that the study discovered that more than one-third of South Africans spend six or more hours at work pondering about their finances and that poor financial health is associated with anxiety, stress, and depression.

According to Magwegwe, work-related stress causes Africa to lose an estimated R200 billion each year.

Worried & anxious about financial health
We show up, just as we have today. However, we are concerned about our financial health. We're worried and anxious about money.

The wandering crippled struggling financially:
I think of it as the wandering crippled since you do what you're expected to do. This does not dismiss the existence of stress, anxiety, or worry. 

When it comes to the infrastructure of society as a whole, he believes that an individual who is stressed, worried, or apprehensive cannot have sound interactions with others, attend work, or execute their highest level of performance.

Preoccupied with financial stress...
He claimed that employees were sitting at work but were preoccupied with stress and worried about their financial situation. 

For instance, I'm actually working and earning an income at the moment. But if the interest rates keep on increasing, my home could be repossessed.  So, we are basically informing employers that this impacts your bottom line.

Safeguard people from suffering financial difficulties:
Further to this, he stated that the research indicated that businesses and policymakers should do more to safeguard people who are suffering.

Develop financial training programmes.
This entailed developing comprehensive training programmes to help consumers beyond the basic principles of finance, such as lessons on emotional aspects of over-indebtedness, planning for the future, and real-life financial instances, as well as providing support systems and specialised financial solutions.  He further suggested that they help themselves by employing technology to budget.

The Psychology of Money

Navlika Ratangee, managing director and psychologist at Independent Counselling and Advisory Services, commented on the study's findings, stating that there are numerous mental health problems associated with finances and over-indebtedness.

Money is a very emotional matter, and it has an unbreakable connection to how we feel on a given day as well as our emotional well-being over time.  Even our everyday emotions affect how we spend our money.

For example, she stated that if we are stressed or anxious about something other than money, it affects our capacity to make financial decisions.

According to Ratangee, so-called retail therapy is something that people justify when they are stressed and want to feel better about what they are going through.

We're subconsciously thinking about whether we can afford to spend money on shopping therapy or whether what we're buying is really a necessity. We're actually just looking at how we might satisfy that void—the liberated feeling that leads to rapid satisfaction—she remarked.

Alfred Matsimbi, education and communications officer for the National Credit Regulator, said:It was worrisome how many people were having trouble financially and in debt, owing primarily to a lack of basic understanding of finances.

This includes not only statistics but also people.
There're people behind these statistics. That's an unfortunate reality. Always know that they're human beings rather than statistics. And, regrettably, over-indebtedness has this detrimental impact, he warned.

Suicide due to over-indebtedness.
Many people go as far as committing suicide because they're over-indebted.

Therefore, it's time for a new strategy. He feels that financial education ought to start in preschool to ensure that a growing number of youngsters who move from primary to secondary school are already accustomed to preparing a budget.

Debt has become an addiction for many South Africans. Retail therapy might result in debt addiction. Numerous individuals purchase goods, oblivious that tomorrow they will find themselves over-indebted, and once over-indebted, chaos strikes, he concluded.

Steer clear of those that aren't authorised NCR-registered debt relief solutions service providers. It really is that simple. Any practitioner specialising in debt relief solutions is required to be NCR-registered because debt relief solutions practitioners are monitored by the National Credit Regulator (NCR).

Why cure debt?
Cure Debt is the ultimate debt relief solution to your unique debt problem.  With a proven track record, we are proud to say that we can help you become debt-free.