Simon Ward, founder and CEO of Floatpays

Employers advised to promote a long-term savings culture in the workplace as the longer term financial outlook is still going to be tough.

The tax respite that workers receive should be channeled into longer term savings (which is better in the face of inflation) so that people better prepare themselves for tougher conditions later down the line.

In his maiden Budget Speech, South African Finance Minister, Enoch Godongwana announced a series of encouraging proposals to bring much-needed relief in the form of R3.5 billion to everyday consumers, as a result of no increases being made to the general fuel levy on petrol and diesel for 2022/23. To protect taxpayers from “bracket creep”, tax brackets will be increased to allow for the 4.5% inflation that Treasury forecasts for the next fiscal year, 

Although these decisions give ordinary South Africans some financial relief, people should prepare themselves for the possibility of tougher economic conditions later down the line. 

This is according to Simon Ward, founder and CEO of on-demand earned pay provider, and local SA fintech, Floatpays. “The Minister has provided some shelter from the storm for now – but inflation will continue to rise and Treasury has said that tax hikes could be on the cards at a later stage should the country’s economy not grow substantially over the next few months – so prudent financial behavior should still be encouraged"

With the future economic outlook still shaky, South Africans should not stop saving. And Ward believes that employers can play an important role in helping employees to do so.  

Ward explains that employers can help drive a crucial savings discipline amongst their staff by using payroll-linked fintech that enables savings contributions to be made directly from paychecks. 

 “Savings discipline for both unexpected financial emergencies as well as a rising cost of living is crucial. A good emergency savings fund should have enough money to cover three to six months of living expenses. With employees potentially having a little more to spare after yesterday’s tax relief announcement, it’s an opportune time to ensure staff have access to an easy and convenientsavings vehicle,” says Ward.