Empowering South Africa's Youth: Impact Sourcing Paves the Way for Financial Wellness and Economic Growth

Youth unemployment remains a significant challenge in South Africa, with countless young individuals struggling to find stable employment opportunities. However, amidst this crisis, impact sourcing emerges as a powerful solution that not only tackles unemployment but also promotes financial wellness for the newly employed youth. By integrating financial education and support into the national impact sourcing agenda, South Africa can pave the way for sustainable economic growth and empower its young workforce.

Impact Sourcing and Youth Unemployment

Impact sourcing refers to the practice of engaging marginalised or disadvantaged individuals, such as unemployed youth, in productive work. It encompasses outsourcing tasks or jobs to socially responsible organisations that provide training and employment opportunities to those who face barriers to traditional employment. In South Africa, impact sourcing has the potential to transform the lives of young people by equipping them with the necessary skills and providing them with much-needed income.

Driving Financial Wellness

While securing employment is undoubtedly a crucial step, it is equally important to prioritise the financial wellness of the newly employed youth. Without adequate practical support and guidance, financial instability can hinder their overall well-being and impede their long-term success. By integrating financial wellness employee benefits into the impact sourcing agenda, South Africa can foster a culture of responsible financial management and empower its young workforce to make informed decisions about their finances.

Reducing Reliance on 'Easy Credit'

One crucial aspect of financial wellness is helping employees reduce their reliance on 'easy credit' e.g. payday loans or retail credit cards. These credit options often come with high interest rates, leading to a cycle of debt. By introducing employee benefits such as earned wage access, where employees can access a portion of their earned wages before payday, South African youth can avoid resorting to predatory lenders. This not only fosters financial stability but also empowers individuals to take control of their financial situation.

Promoting Savings Discipline

Another dimension of financial wellness is improving savings discipline among newly employed youth. Paycheck-linked savings programs can play a significant role in encouraging saving habits. By automatically deducting a portion of an employee's paycheck and depositing it into a savings account, South African employers can help young employees build an emergency fund, plan for the future, and develop a healthy savings mindset. Such initiatives cultivate financial resilience and enable individuals to weather unexpected expenses with confidence.

Financial Education for Better Money Management

Financial education should be a key component of the national impact sourcing agenda. Equipping young employees with the knowledge and skills to manage their money effectively is crucial for their long-term financial well-being. By providing accessible and comprehensive financial education, employers can empower its youth to make informed decisions about budgeting, debt management, investing, and other key aspects of personal finance. This knowledge equips them with the tools to navigate financial challenges, make wise financial choices, and lay the groundwork for a secure financial future.

Impact sourcing presents a remarkable opportunity to combat youth unemployment in South Africa. By incorporating financial wellness into the national impact sourcing agenda, the country can promote economic empowerment and sustainable growth among its young workforce. This holistic approach not only secures employment opportunities but also equips individuals with the necessary tools to navigate their financial futures successfully. Investing in financial wellness today not only addresses immediate employment needs but also sets the stage for a prosperous future, where South African youth can thrive and contribute to the nation's economic growth.

Money on their minds - why your employees can’t focus and how you can help

The majority of the South African workforce operates in a permanent state of fight or flight. With 75% of their salaries going to debt repayments, South Africans have little money left to cover monthly living expenses – and very often, none left for emergencies.

Dealing with this level of stress puts the brain in emergency mode – all the time – and it’s not good. The constant release of adrenaline and cortisol (the stress hormone) severely impacts peoples’ well-being: their brains and bodies literally behave as if their survival is at risk.

Money on the mind

When they’re worried about how they’re going to pay school fees, the electricity being cut off, or having an asset repossessed, employees find it difficult to concentrate, remember things, pay attention, or solve problems. And to think, many of them operate heavy machinery, perform complicated tasks, and handle sensitive company information.

In dealing with financial crisis after financial crisis, their “bandwidth taxes” increase, and their mental resources are sapped. They develop debt stress syndrome, which could manifest in obvious ways, such as lack of sleep, loss of appetite, depression, and mood swings.

Or it could have more severe consequences on the brain and body, including:

Being unable to manage their debt also impairs employees’ psychological functioning and decision-making. It consumes their thoughts and undermines their ability to think clearly.

To counteract the adrenaline, they might seek hits of dopamine (the feel-good hormone) in unhealthy places, like alcohol, drugs, or food. Or they could indulge in other ways, like payday spending sprees that result in impulse purchases, buyer’s remorse, and another long stretch to payday. To make ends meet, they might take out payday loans or other lines of ‘easy credit', which traps them in the debt cycle through high interest rates, late fees, and the need to take out new loans to cover existing ones. Once they’re in the debt trap, it’s nearly impossible to get out.

Yet, although most people suffer from debt stress syndrome, no one speaks about the emotional and psychological toll of debt – or the powerful mental and physical health benefits of getting out of debt. One way to solve some of the problems is by giving your employees early access to their earned pay – with no cost and minimal effort on your part.

If an employee can access a portion of their earned income – money they’ve technically already worked for – to pay for necessities instead of turning to credit, they reduce the amount of money they spend on servicing debt and can use it for living expenses instead. 

The powerful effects of debt relief on the brain

Research shows that when employees are paid more frequently – biweekly as opposed to monthly, for example – they can cover expenses faster and get ahead in paying off loans. They reported feeling less stressed and anxious, and the employer benefited from increased productivity, fewer mistakes, and higher work quality.

Paying off debt not only feels good; it can also lead to physical healing. With a weight off their minds and shoulders, employees have more time to think. They can focus on the task at hand, they learn faster, and their cognitive functioning improves. Lower debt means less stress, restored self-esteem, financial empowerment, and improved personal relationships.

In a word, they’re happier.

Paying off debt can also help your employees stay financially solvent. Over time, they can develop the discipline to keep their finances in check, and it becomes easier to make wise decisions about saving, spending, and tackling debt.

Move your employees from debt to a savings snowball

Floatpays helps your employees take those all-important first steps in moving from debt to savings. Instead of turning to credit, your employees get on-demand access to a portion of their earned pay whenever they need it to cover unplanned expenses and to manage their cash flow better. In not forcing employees to wait until payday to access what’s due to them, you free up mental bandwidth for them to do their best work. And that should be the goal of any employee wellbeing programme.