Employee Financial Literacy… Why Should Companies Take Responsibility?
I could rant about the educational system and the lack of financial literacy included in the curriculum, but instead, I'll talk about why I think it's so important for businesses to educate, offer support and consider implementing a financial literacy program for young adults when they join the business.
I'm sure we can all agree financial literacy is absolutely crucial.
It provides us with the knowledge and skills needed to manage our money effectively both now and, in the future, and in both our personal lives and within the business. When we have a solid understanding of financial concepts such as budgeting, saving, investing, and credit, we're better equipped to make smart financial decisions that can set us up for long-term success.
Why should the employer take on the responsibility and offer support to employees?
Because it's the right thing to do. Also, the business will benefit.
Financial literacy helps young people avoid common financial pitfalls such as overspending, accumulating debt, and making poor investments. By learning to manage their money responsibly, young people can avoid these costly mistakes and instead make informed decisions that will help them achieve their financial goals.
It's also essential because it plays a critical role in our well-being. Financial stress has been shown to contribute to a range of mental and physical health problems, including anxiety and depression. By gaining the knowledge and skills needed to manage money effectively, we can reduce financial stress and improve our overall quality of life.
Here are just some of the ways businesses can benefit from financially literate employees:
They're less likely to experience financial stress, which could reduce employee absence, increase productivity, and reduce employee turnover.
They are better equipped to manage their personal finances, which can result in fewer requests for salary advances or loans.
They are better prepared for unexpected financial emergencies, which can reduce the need for employer assistance or support.
A better understanding of tax implications and the company’s decisions and strategies
They can contribute to the company's financial health by making smarter decisions about spending and budgeting.
A better understanding of savings and investments, increasing the likelihood of taking advantage of employer-sponsored retirement plans
They can help identify and prevent fraud, which can save the company money and protect its reputation.
They can negotiate better deals with vendors and suppliers, which can result in cost savings for the company.
They can help educate and mentor other employees, which can improve overall financial literacy within the company.
They can contribute to a positive workplace culture by promoting financial wellness and responsibility.
How can companies implement a financial literacy program?
Here are just some effective methods for businesses to educate, promote and support financial literacy:
Start with the basics - Teach how to manage it effectively, through basic bookkeeping. Help them to create a simple spreadsheet that can show exactly where they're spending money each month.
Need vs Want - Help them to understand the difference between needs and wants, and how to save money for future goals.
Use real-life examples - Use everyday examples to teach young people about financial literacy. For example, when shopping for groceries, explain how to compare prices, find the best deals, and how to benefit from sites such as TopCashBack.
Encourage savings - Encourage them to save money by setting up a separate savings account. This will help them develop a savings habit and learn the importance of budgeting. Even if it's just £5 per month!
Seek out resources - There are many resources available to help young people learn about financial literacy. Encourage them to explore these resources to gain a deeper understanding of financial literacy.
Internal workshops – Offer financial planning workshops. Invite an expert into the business to talk about credit cards, loans, overdrafts, and unarranged overdrafts.
Introductions to experts - Provide access and introductions to financial advisors so they have someone to call with any questions they may have.
Tools - Encourage employees to use financial planning tools.
Financial Support - If the business is able to do so, and you have an employee paying off a credit card, store card, or loan with interest, offer to clear it for them. If the business can pay the balance off, they can make repayments each month via payroll, interest-free. It puts the employee in a better financial position and links back to benefit 1 above; less likely to experience financial stress, which could reduce employee absence, increase productivity, and reduce employee turnover.
I'm passionate about promoting financial literacy and financial education for students of all ages. Budgeting, saving, investing, and credit management are all crucial skills that young people need to learn.
Let's work together to equip the next generation with the knowledge and skills they need to succeed! 💰💪