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:
INDIVIDUAL + ECONOMIC BENEFITS
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.
ELEVATED COMPANY CULTURE
“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.
INCREASED EMPLOYEE PRODUCTIVITY + SATISFACTION
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.