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Reaching People Through Financial Education

By Nozizwe Vundla, 25 February 2022

Empowering more people to live with financial confidence is imperative to broaden socio-economic access across Africa. Solid financial education is a powerful mechanism to unlock potential and give people the best possible chance of building a bright future.

The Saver WayaWaya WageWise programme – a partnership between the Association for Savings and Investment South Africa Foundation and the Sanlam Foundation – is having a real impact on workers’ lives by instilling critical money management skills through a blended learning approach, offering face-to-to face training as well as WhatsApp interventions.

Nozizwe Vundla, Head of Sanlam Foundation, says, “Financial education tends to be dull and, all too often, irrelevant. I’ve heard so many adults lament not learning how to do their taxes or draw up a budget in school. We need to focus on practical, turnkey skills that are immediately applicable in real life. WageWise does this through interactive, creative modules that break down vital lessons into bite-sized bits, with quizzes to check understanding and up engagement.” WageWise has reached over 10,000 black individuals in 2021, most of whom are women, earn R250,000 or less and are based in rural regions.

A rapid impact study on WageWise found that 90% of the blended learning and 75% of the WhatsApp cohorts said they knew more about managing their finances post the programme, and could apply these lessons to their daily lives. Over 90% of the participants were sharing their new-found knowledge with family and friends. Almost all agreed that the learnings helped them cope with money management during COVID-19.

Vundla adds, “The programme also does critical work in pinpointing knowledge gaps. The top four difficulties most participants experienced prior to going through the programme were: budgeting, short-term savings, debt management, and distinguishing between wants and needs.”

Addressing the ‘big four’

A training module addresses each of these areas, along with other core capabilities like investing, balancing the books, managing credit scores and saving for retirement. When it comes to addressing the ‘top four’, Vundla suggests:

  1. Start with the needs and the wants: A need is something vital – like a home or groceries. A want is a nice-to-have that may improve one’s quality of life. It’s critical that people practise differentiating between the two. A good exercise to do is to go through an old bank statement and classify each item of expenditure. Was it necessary? Did it add long-term value to your life?
  2. Now begin a budget: A budget is a plan for what to do with one’s money each month to reach set goals. First off, a person must know how much they earn. Then, it’s important to know how much they owe. Draft a list of monthly expenses – fixed (aka expenses that stay the same each month, like rent), and variable (expenses that fluctuate each month, like groceries). Tally these up and see if the expenses exceed income. Draft a plan to cut down expenses and maximise saving. Use a 50/30/20 Rule as a framework. 50% of income should go to needs, 30% to wants, and 20% for saving and debt repayments.
  3. Short-term savings: This starts with a goal. A goal is a dream with a deadline. It’s important that people have the confidence to set clear milestones to work towards. Then it’s about creating a realistic roadmap to reach these. Short-term saving is a key part of that. There’s a critical misconception that one needs a lot of money to save. That’s simply not true. Small amounts, saved consistently in high interest-earning accounts, add up to bigger amounts. It’s about getting started as soon as possible.
  4. Debt management: In December 2021, the South African Reserve Bank reported that nearly half of all South Africans could not repay their debts or lost income in the previous six months. Debt can feel like a dark hole that’s impossible to climb out of. The secret is starting small. Consistently paying off the smallest debts to free up funds to pay off the next smallest debt, and so on.

The real impact on people’s lives

Vundla says that learning these sorts of skills through WageWise has had a profound impact on people’s daily realities. For example, Bongani, a 25-year-old former small business owner, used to struggle to save because he spent more than he needed to. He said WageWise taught him to differentiate between needs and wants, read a payslip, and increase his credit score.

Yasmeen, also 25, earns a small internship stipend that she struggles to stretch to cover all her expenses. “The programme made me realise I was wasting money in the past. I used to focus more on my wants than my needs,” she added. She’s now managing to save R250 a month for emergencies and to get her driver’s licence.

39-year-old single mom of two, Zanele, earns under R3,000 a month and gets little to no maintenance support from her ex-partner. WageWise helped her budget and prioritise her needs over wants. She is now looking for ways to earn additional income to support her family. Critically, she learnt to start ‘where you are, with what you have’. She now aims to start – and grow – a small business venture.

Vundla concludes, “WageWise aims to instil lasting financial resilience to give people the confidence to go after their goals, look after their families, and make their money work as hard as possible for them. After the last three years, we are seeing even starker inequalities embedded in our society, with COVID-19 having a dire impact on myriad people’s lives and livelihoods. Financial education is a way to give people a sense of agency; to take command over money matters and have the confidence to imagine a meaningful, fulfilled life.

“Sanlam is committed to our purpose: to empower generations of Africans to be financially confident, secure and prosperous. WageWise is a powerful means of doing this. We have seen the impact that financial literacy can have when it’s done in a new, dynamic format that reaches people in the right way.”

Sanlam Life Insurance is a licensed financial service provider.
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