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How To Become Financially Free 76% of the average South African salary is servicing debt. This is causing massive financial stress for blue and white collar workers alike. Do you know how your workforce is affected by debt? Are your engagement and productivity levels suffering? Hayley Parry and Gary Kayle of The Money School unpack the truth about financial stress.

By Nadine von Moltke-Todd

You're reading Entrepreneur South Africa, an international franchise of Entrepreneur Media.

Mike Turner Photography

Vital Stats

  • Players: Hayley Parry and Gary Kayle
  • Company: The Money School

  • What they do: Independent, scalable financial education solutions for businesses — both their employees and clients.
  • How: Online, in-person or at one of 44 Boston City Campuses nationwide South African education in 2016: 18 738
  • Financial services products sold: 0
  • Coolest tech: Artificial Intelligence infused customer support through their Money Coaching™ team
  • Visit: www.themoneyschool.co.za

What is the reality of financial freedom in this day and age?

People want to be wealthy,
but instead they live in debt. Rising indebtedness, lowering disposable income, using the bank's cash to gear your lifestyle or living above your fighting weight have become the norm. People are financially dependent, but should be financially independent.

How do money problems affect employee productivity and efficiency?

The reality is that people will job hop for an additional R3 000 — sometimes even less. They believe they'll get their affordability back with a little bit more money; unfortunately this is rarely the case. Instead, they just spend more.

High indebtedness impacts staff productivity
and "presenteeism' because the average South African employee spends three hours or more per week on financial problems and 45% worry about money daily. It's difficult to concentrate on work responsibilities when you're always stressed about money.

We find employees start to resent their employers, believing they are under-paid, when in fact their problems stem from debt and the mismanagement of their primary wealth building tool — their salaries.

Is this predominantly a blue collar worker problem?

Not at all. No one is immune. White collar workers are as, if not more, affected by debt. For example, we recently ran our course with a company of 300 employees, all of whom were white collar workers.

We always begin with a survey to gauge the financial health of each individual taking the course. When asked how many people could deal with a R5 000 financial emergency, only 27% of the group admitted they would be able to without taking on more debt. After the five-week course, this had risen to 57%.

No one was earning a larger salary, but they did have a better understanding of their own money. 92% were worried they were making the wrong financial decisions, and 63% spent more than they made. These had reduced to 13% and 27% respectively two months later.

The level of indebtedness we are currently facing means that the average South African gets poorer the longer and harder they work. Our aim is to equip people with the skills and confidence they need to eradicate debt and achieve their financial and lifestyle goals.

Why is this something that employers should care about?

It directly impacts their bottom line. Money stress affects all aspects of our lives. The larger an employee's debt, the higher this stress. This has a knock on effect on their health, productivity and even attendance at work. With 76% of employees' take home pay spent servicing debt, it's no wonder that 9 out of 10 South Africans will not be able to afford to retire.

What is the solution to this dilemma?

And independent financial education. Whether it's self taught, or taught at schools, varsities or the workplace (or preferably all three) it's important that everyone is educated and empowered to take control of their financial future without being sold financial services and products at the same time.

As a team, we understand this issue from various angles. Hayley's background in financial media helped us package our content in an engaging manner — particularly online — which was key to scaling our business. Gary has an intimate understanding of the unhealthy relationship we can quickly form with money, particularly when we start earning decent cash for the first time. In his first job as a salesman, Gary was romanced by debt, flashy cars and gold credit cards. He was converting hard work into debt. It was this experience that gave him an intimate understanding of the problems most people face when it comes to money and he was determined to help others once he'd figured out how to help himself. After a stint as a broker he realised how wide-spread this problem was and how everyone needs a financial education irrespective of their salary bracket or professional qualification.

What are the key points that people should consider when they think about the financial wellness of themselves and employees?

The first is that our financial planning tends to be reactive instead of proactive. If you want to achieve financial freedom this has to change. We have
a genuine desire to see South Africans live better, healthier financial lives, but this starts with a long-term view of growth.

Only 3% to 6% of South Africans will retire financially independent. 94% of South Africans work their entire lives and end up broke, and this includes a lot of high net worth individuals. Income and wealth are not the same thing. There's a huge difference between wealthy and rich people, starting with the fact that wealthy people sleep at night, and aren't constantly stressing about money.

The average age of a person in debt counselling is 36. Basically, they've worked just long enough to get into real debt. How much they earn isn't important in this scenario though. Most people are broke between the 15th and the 20th of the month. We're in the business of helping people understand what it is that wealthy people know and do differently — irrespective of what they earn. If you can help your employees focus on building a sustainable financial future, you'll be freeing them from stress and debt whilst ensuring you reduce your staff turnover, and improve the productivity and health of your employees. It's a win-win.

Where do you start?

Everyone should value their salaries, not for the debt that their salary allows them, but the opportunity to build wealth. Debt does the opposite. It stunts personal growth, because no matter how hard you try, you'll never get out of debt if you
can't manage your money. Financial freedom is not linked to how much you earn, but how much you save. Financial literacy just doesn't cut it. Anyone can be financially intelligent with the right coaching and focus.

What type of commitment does it take to achieve financial freedom?

It takes five focused years to make a significant dent in building assets — that's it. You need to put them in place and then let them grow. Yes, it takes patience, but it's a focused, disciplined patience. Hope is a terrible strategy. The key to financial freedom is the consistency of application.

Everyone needs to know their number. What do you need to be investing now to maintain the life you want when you stop working? Until you can afford that, don't spend on other stuff.

This is not about losing people in the technical elements of good financial planning. It's about freeing your mind, lessening stress levels, and spending more time doing what you love.

Anyone can be financially independent. Financially free does not mean super wealthy. It means living debt-free, saving and investing, and living life on your terms.

Top management tip

If you're holding weekly meetings with your team, make sure they're worth the time and effort everyone is spending in a meeting instead of working.

Follow the WWW framework: Who, What, When. At the end of the meeting, take a few minutes to summarise who said they are going to do what and by when. This isn't about micromanagement — it's about clear communication and ensuring accountability from all team members, the foundation of strong, sustainable management.

Nadine von Moltke-Todd

Entrepreneur Staff

Editor-in-Chief: Entrepreneur.com South Africa

Nadine von Moltke-Todd is the Editor-in-Chief of Entrepreneur Media South Africa. She has interviewed over 400 entrepreneurs, senior executives, investors and subject matter experts over the course of a decade. She was the managing editor of the award-winning Entrepreneur Magazine South Africa from June 2010 until January 2019, its final print issue. Nadine’s expertise lies in curating insightful and unique business content and distilling it into actionable insights that business readers can implement in their own organisations.
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