March is National Credit Education Month, a time to spotlight financial literacy and help South Africans take control of their finances. With credit being both a lifeline and a liability, education is key to making informed financial decisions and avoiding debt traps.
Aions Ventures invested start-ups, Franc and Level Finance, are reshaping financial wellness by equipping individuals with the knowledge and tools to save and manage credit responsibly.
Sebastian Patel, co-founder of Franc, emphasises that budgeting is the cornerstone of financial well-being. “There are two components to budgeting: money in and money out. The first step is determining your monthly income, while the second is understanding your spending patterns. Ideally, what comes in should be more than what goes out, but if not, there is work to be done,” says Patel.
A useful guideline for budgeting is Elizabeth Warren’s 50/30/20 rule: 50% of after-tax income should go toward essentials like food, shelter, utilities, and healthcare; 30% toward discretionary spending such as entertainment and non-essential clothing; and 20% toward debt repayment and savings.
For many South Africans, avoiding debt entirely is not an option. Instead, the key to financial stability lies in managing debt wisely. Patel outlines four fundamental debt rules:
- Avoid expensive ‘consumption’ debt, such as high-interest credit cards or payday loans.
- Use ‘good’ debt, such as home or education loans, in moderation and ensure monthly repayments leave room for savings.
- When paying off debt, prioritise eliminating ‘bad’ debt first. These are loans with high interest and little long-term benefit.
- Keep total debt below 40% of annual income to maintain financial flexibility.
Reesa Gabriels, CEO and Founder of Level Finance, highlights that financial literacy challenges are deeply embedded in South Africa’s socio-economic landscape.
“For many South Africans, saving was never taught. Money was scarce, and when it came in, it was either spent immediately or held just long enough to cover the next crisis.”
This cycle continues into the workplace, where employees often struggle to save due to financial pressures, including the reality of ‘Black Tax’—the obligation to support extended family members. Gabriels notes that traditional employer-driven financial wellness programs often miss the mark by assuming employees have surplus income to save.
“The question is not whether savings should be encouraged, but rather how savings initiatives can be structured to align with employees’ financial realities. Many enter the workforce already burdened by debt, sometimes taking out high-interest loans even before their first paycheque.”
Level Finance advocates for employer-led financial wellness initiatives that move beyond conventional savings plans to address real-life financial challenges. Gabriels suggests several actionable strategies:
- Tie earned wage access (EWA) to savings and debt reduction: Employees using EWA should be encouraged to allocate a portion toward savings or debt repayment.
- Incentivise good financial behaviour: Employers can reward consistent savings habits or debt reduction efforts through incentives such as matched contributions.
- Leverage workplace savings structures: Supporting stokvels or employer-backed savings groups can offer structured alternatives to informal, high-risk lending options.
- Normalise conversations about financial health: Providing access to financial advisors and education programs fosters a culture where employees feel empowered to make informed financial decisions.
