Financial woes are seen as one of the four main causes of anxiety and depression in South Africa, with the debt spiral seeming inescapable. Are financial issues truly inescapable, though? Impossible to tackle? At Kaelo Money we believe financial stress is not an ‘un-understandable’, ‘greater than’ issue. Rather one consisting of quantifiable, tangible steps that, if satisfied, can lead to a level of financial freedom, previously unattainable by the broader South Africa.

The economic climate in the South African context has put exceptional pressure on financially distressed employees. The Covid-19 pandemic and the Russia-Ukraine conflict have led to negative macroeconomic factors such as persistent increases in unemployment levels and inflationary pressures, exacerbating the financial stress that already rests on the conscience of every South African. Unavoidable mental stress heightens, consistently brought on by all-too-present money issues, with a recent Sanlam Savings survey indicating that 78% of South Africans are extremely worried about their finances.

Increases in inflationary pressures, specifically petrol and electricity prices, have resulted in a further decrease in employees’ monthly disposable income.

The cyclic nature of poverty and illness further tightened by the pressures of everyday life leads to a decrease in the ability to make ends meet. The inability to sleep, the harsh pain in the chest, and the desire to sink back into vices are all brought on by financial stress. The roots need to and can be tackled.

According to DebtBusters Debt Index Q12022, in the last six years, there has been a 31% decrease in disposable income which we have seen deteriorate further. This restricts the ability of employees to save for emergency events as well as keep up with their month-to-month expenses.

The persistent increase in unemployment has led to breadwinners of families becoming responsible for more financial dependents. These are dependents who were previously stable members of the workforce. The negative downstream conditions affect the whole family unit as the breadwinner experiences increased levels of anxiety. When they can no longer support their family, any semblance of self-worth crumbles, they experience depression, and they see themselves as a failure in the eyes of their dependents. Further strengthening the vicious financial-stress cycle and leading to worsened cases of abuse, whether that comes in the form of substance abuse or domestic violence.

A 2022 FNB study stated employees that are designated as middle-income earners spend 80% of their income within 5 days of payday. Is this a commentary on the financial aptitude of the employees or a lack of financial education present in our system? A system that has resulted in employees that are consistently under the weight of financial pressures with no points of relief. At Kaelo Money we say, no more and focus on sustainability, education and the employee.

A majority of employees, having drawn on their savings to meet the financial needs of their households are at times forced to resort to credit facilities to keep up with their lifestyle or meet unexpected financial demands.

Access to regulated credit facilities has decreased substantially and is continuing to decrease, as the risk profiles of employees increase. According to an extract from “Decline in short-term credit is weighing down SA economy, research finds” by Lameez Omarjee, since 2015, rejection rates have increased from 52% to 63% and this trend is only expected to worsen with the current trajectory of the South African economy.

As a result of this, employees have little to no choice and are pressured to turn to loan sharks who are unregulated and charge fees on average between 80% and 100%, with fees commonly exceeding this. Once again only exacerbating the brutal nature of the cycle. All adding pressure to the unpredictable balancing act of the everyday worker.

A big problem is education, specifically financial education. Employees do not know how to effectively budget and learn to effectively save. This is where Kaelo Money is assisting employees in their money matters.

Kaelo Money offers access to ethical and affordable credit whilst giving people an avenue to access financial coaching, that can facilitate their financial wellness journey and financial rehabilitation. The best way to overcome an increasingly tumultuous financial environment is to make wise financial decisions. Be aware of how you spend your money and make it work for you, not against you.

We are a South African company looking to solve South African issues in South African ways. We are changing the landscape of what financial wellness means. We are Kaelo Money.

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