Why Financial Literacy Should Be on Every Employer’s Mind

Studies show how little Indians understand their finances. Even if they know details, like how interest rates work, many people don’t actually understand what they should do with their money and how their present financial behavior affects their future.

As a result, people are increasingly deepening their debt, making it impossible to catch up or build savings. Financial illiteracy, or failure to make responsible financial decisions, will likely cause other serious problems, such as anxiety and depression from frequently worrying about money, savings, and eventual retirement.

In fact, even in relatively strong economies like America, a majority of people say that they lose sleep over financial concerns. A CreditCard.com survey conducted in the midst of the relatively strong 2017 economy found that 65 percent of those polled said they lie awake at night fretting over money worries.

As an employer, imagine how that anxiety impacts your workplace.

It is easy to see how the overwhelming stress might affect a person’s attitude and overall performance in the workplace. Financial illiteracy and the resulting anxiety not only impacts morale and productivity but could impact retention, as financially strapped employees are easily swayed to leave for even the slightest increase in salary.

As more and more people struggle with their finances, employers should promote financial literacy programs throughout their company. Employers have the unique ability to improve the mental health and overall lives of their employees by strengthening their basic financial literacy and comprehension. A financial literacy program not only provides better debt and retirement savings outcomes but can also increase employee productivity, morale, engagement and loyalty.

Here is a deeper look into some of the many positive impacts of financial literacy programs:


Financial wellness can have a positive impact on individual and economic levels. By implementing financial programs, companies can singlehandedly boost the knowledge of their employees and help strengthen the economy. While financial literacy can’t combat every problem – such as unemployment rates or the insurmountable cost of higher education – it can help people become savvier with their money. This will allow people to better navigate their financial condition, plan for the future and handle sudden curveballs. Financial literacy has severe impacts on economic health. Increased knowledge will lead to a stronger, more competitive economy. While individually, financial education can help people make better investments, accumulate more wealth, and have a higher inclination to plan for retirement.


“Company culture” has become the corporate world’s new buzzword, as more and more employers realize the value of creating a great work environment for their employees. One easy and relatively low-cost way to accomplish this is by offering financial literacy programs. The workplace is one of the most effective places to administer financial literacy training because most people receive their primary income at their workplace and are encouraged to utilize company retirement programs. By providing workplace financial education, employers can help their employees develop skills to manage their paychecks and save for retirement. This will elevate the company’s culture because employees will feel as though their employer is on their side and cares about their financial future.


The benefits of workplace financial education also reach the company as a whole. Employees who are less burdened by financial problems are more productive, innovative, collaborative and engaged. More and more research points to the positive relationship between financial wellness, worker satisfaction, and productivity. For example, Caroline Cakebread, a personal finance writer, cites research by Joo Kim, writer of “Financial Stress, Pay Satisfaction, and Workplace Performance,” in her article on workplace financial wellness. Kim found that employees with more financial distress are absent from the workplace more often, display less commitment to their organizations, and are less satisfied with their pay, regardless of the amount of money they make.

Companies that implement an effective financial wellness program will experience a significant return on investment through the dramatic reduction of employee sick days, health-care costs, worker’s compensation and disability management claims. Furthermore, their employees will work harder and perform at a higher level if they are not distracted by their personal financial issues.

Workplace financial literacy programs are becoming the new norm, as employers recognize these benefits and the role they can play in their employees’ financial health. More than 40 percent of companies say they already have some type of financial wellness strategy in place or plan to introduce one.

As employers search for a financial literacy program, they should take into account that most people have similar issues. To begin with, they should start with basics of personal finance. For individual employee needs personal financial planning sessions can be facilitated.

Financial inclusion, the key to women’s empowerment in India

A recent report by the United Nations titled, ‘Turning Promises into Action: Gender Equality in the 2030 Agenda for Sustainable Development’, said that achievement of Sustainable Development Goals (SDGs) could be difficult without gender equality and women’s empowerment. In fact, development in any sphere would be incomplete without equitable participation and contribution of women.

It is indeed difficult to fathom an equal world without empowering women with equal social and economic opportunities. I believe empowerment is a holistic concept that requires targeted interventions across multiple action areas. However, including women in the financial mainstream and making them financially literate are among the most important action areas.

Under the Pradhan Mantri Jan Dhan Yojana (PMJDY), India is working on comprehensive financial inclusion of all the households in the country. Of the 31.48 crore beneficiaries banked as on April 18, 2018, more than half (16.62 crore) are women. According to the World Bank’s Global Findex Database 2017, in developing economies female account owners are, on average, five percentage points more likely than male account owners to have an inactive account. In India, however, this gender gap is about twice as large, says the report, adding that 54 percent of women with an account made no deposit or withdrawal in a year as compared to 43 percent of men.

India needs to sustain this momentum to transform into a completely financially inclusive economy. Otherwise, despite being linked to bank accounts, the rural and the excluded population will not be able to avail full advantage of financial inclusion. Building and enhancing financial literacy of the population, especially women, is imperative to sustain financial inclusion while ensuring women’s empowerment.

There are varied reasons for low financial inclusion and literacy among women. A majority of the women in India, especially in rural areas, are homemakers, which is a full-time job with no payment. Lower participation in workforce and wide gender pay gap are other constraints. As per the National Sample Survey 2011-2012, the Workforce Participation Rate at an all-India level is 25.51 percent for females as against 53.26 percent for males. The survey also found that irrespective of education level and residence (rural/urban), the average per day wage/salary earned by a female is less than that earned by a male.

This results in weak economic and decision-making power for them within the household. Usually, women in the rural areas do not possess any assets other than gold. Land and other assets are hardly bought in their name. Absence of assets leaves women with fewer opportunities to avail institutional credit.

This huge lacuna, however, also provides an opportunity to change the narrative. For this, women need to be educated on the importance of institutional savings, avenues of subsidiary income and ways to avail institutional credit for micro activities. Financial literacy can empower women to develop a financial identity even with their small and micro household savings, and help them to get access to formal credit for gainful occupation giving them economic freedom and power. Financial literacy can motivate women generating sustainable income through micro activities to wholeheartedly use financial systems and institutions and slowly create a ground for their graduation to higher income opportunities.

Embedding financial literacy in programmes where women have significant representation could be a good starting point. For instance, the Self Help Group-Bank Linkage Programme (SHG-BLP) programme, which is the largest microfinance programme in the world in terms of client base and outreach, provides SHGs access to institutional lending. More than 86 percent of the groups under this programme comprise exclusively of women.

We also need to innovate and use technology to deepen financial literacy amongst women. Physical distance from the financial literacy contact centers and trainers and the socio-cultural contexts are major impediments in extending financial literacy to women. Therefore, there is a need to use interfaces that allow women to access financial literacy easily, conveniently and without disturbing their contexts. India has witnessed revolutionary penetration of mobile phones even in the hinterlands. We need to ensure that every woman who owns a mobile phone or has access to one is able to use it for educating themselves and managing their own finances.  India will truly become Digital India when every woman has access to mobile devices and is able to use these channels for their own empowerment and gaining economic freedom.

Credit: Yourstory