Education the way to avoid debt trap


By Jim Freeman

Cosatu?s call for a general amnesty from credit bureaux blacklistings, blots on the financial histories of upwards of two million workers, offers concrete proof of the fact that South Africans are generally ill-equipped to organise their personal and business finances.

However, financial adviser Gill Kabe and former employee assistance programmes manager at the Services Seta, Lisa Venter, believe that the benefits of an amnesty will be short-lived. The two have joined forces to present a public series of personal and business financial management workshops around the country prior to the traditional annual end-of-year spending spree, during which the slide into debt can often become uncontrolled.

"The ease and extent to which people can obtain credit - sometimes far exceeding their annual incomes - when coupled with their desire for affluent lifestyles means it is very easy for them to fall into the same debt trap,' maintains Venter.
"It is also generally accepted that people who are stressed cannot concentrate fully on their jobs. They are not only unproductive, they can also be downright dangerous to others.'

Workers who are struggling with debut can place an additional burden on their employers because, she says, "they may regularly ask for loans or for advances on their salaries to meet unforeseen expenses, or oblige the finance department to ensure garnishee orders on their wages are complied with'.

"As such, personal financial planning is as worthy an employee assistance intervention as HIV/Aids programmes and substance abuse counselling.'
At the same time, many of South Africa?s thousands of small, medium and micro-enterprises (SMMEs) close their doors every year simply because their owner-managers do not have basic financial acumen.

"This is not a criticism but a reflection of the fact that many people are thrust into entrepreneurship through circumstances not necessarily of their own making. It is particularly those who start enterprises in order to survive retrenchment that are ill-equipped for the financial aspects of running a business,' contends Venter.
She argues that "even line managers in larger, established businesses are disempowered when it comes to financial management.

"Most managers do not have the financial skills to manage their departments or budgets effectively, yet they are measured against such criteria. Business owners need to understand how to anticipate the unknown when it comes to finance and deal with the associated risks.'

Kabe, who has been presenting financial planning sessions for the past four years, says people are generally daunted by the subject and, even though they know they have to plan for the future, tend to adopt an "ostrich' approach - muddling along and hoping things will work themselves out.

"Women especially suffer from the Cinderella syndrome; a prince will come along and rescue me,' she believes.

"Institutions, legislation and financial planners often just muddy the waters. While processes have been put in place to protect consumers, they are confronted with a mountain of paperwork which leads to the perception that financial planning must be really complicated and risky.

"Thankfully, this is just a perception.

"Anyone can understand the process as long as it is presented in a simple and logical way,' maintains Kabe. "This is not to say that you won?t need a qualified financial planner to assist you because you certainly will.

"The difference is that you will understand why that person is suggesting a specific product or service, as well as realise the importance of having a long-term relationship with a financial advisor.

"You will have an idea of what needs to be attended to, in order of priority, and be able to develop a plan that will allow you - over time - to achieve goals you have set for yourself. "It?s not rocket science.'

The personal finance workshops will be held from 9am till 12.30pm on the dates below and the business finance equivalents will follow them from 1pm till 5pm. The cost is R650.00 per person per workshop (or R1300.00 if they attend both).

Anyone wishing to obtain more details of the workshops - which will be held in Johannesburg (September 15), Cape Town (September 27), Port Elizabeth (September 28), Durban (September 29), Nelspruit (October 11), Polokwane (October 13) and Bloemfontein (October 20) - can contact Lisa Venter at 084 - 8557603 or [email protected]. Gill Kabe can be reached on 072 - 0121221.