In recent years, inflation, high cost of living, and recession have been major financial stressors for employees. To worsen the case, BrightPlan reports that 79% of workers are in debt, and 38% have barely enough emergency savings. A large reason is due to poor financial education for employees. If this persists, employees’ mental health can be negatively impacted, leading to loss of productivity at work.
The solution to this? Create an environment where workers' financial well-being thrives. And it all begins with adequate financial literacy training. Doing this helps them make informed monetary decisions that relieve and stabilize their personal and work lives.
In this article, we show you why investing in financial literacy for employees is a smart decision for businesses. You’ll also discover how to implement successful financial literacy training programs that help workers become prudent money managers.
National Financial Awareness Day 2024
National Financial Awareness Day falls annually on 14 August. This day is dedicated to learning about principles and practices that can guarantee a solid financial future. Many organizations leverage this day to encourage employees to take control of their financial health. Its goal is to educate people about proper ways to manage their finances and make informed decisions to help them achieve their monetary goals.
Employers and HR teams can organize various activities to celebrate National Financial Awareness Day. This includes counseling, coaching, and resources enlightening employees on debt management, spending, budgeting, saving, investment, goal-setting, and other money-related topics.
Financial education for employees is crucial to team success. By celebrating this day, you arm employees with adequate knowledge for securing their financial future. Also, understanding these concepts helps workers avoid costly mistakes that can wreck their finances. Ultimately, they make their money work for them and enjoy a balanced life.
Want more engagement ideas?
Download our HR Calendar 2024 for year-long inspiration!
What is financial literacy training?
Financial literacy training involves using educational measures to break down monetary concepts such as personal financial management, budgeting, taxation, borrowing, savings, and investing. Examples include workshops, 1-on-1 meetings with financial advisors, seminars, webinars, etc.
According to BrightPlan, only 18% of employees have basic financial literacy. This explains why 91% of employees are stressed about their finances. But with financial literacy training, employers can help change this narrative.
For example, employees become self-sufficient and better equipped to tackle monetary issues. Furthermore, they develop good money habits like saving and investing instead of splurging.
Financial literacy training reduces stress and anxiety so employees can achieve monetary stability while staying focused and satisfied with their jobs.
Why is financial education for employees important?
Financial education for employees helps workers make smart decisions with their money. But beyond that, it also:
Reduce stress and improve morale
According to a 2023 PWC survey, 57% of workers say worrying about their finances is a major cause of stress. This stress negatively impacts their mental health, sleep quality, and self-esteem. Eventually, an employee might find it difficult to concentrate on tasks and lose interest in work.
However, with financial literacy for employees, you show workers how their money habits affect their future. These trainings easily address major concerns like monthly expenses, taxes, insurance, healthcare, retirement planning, etc. But once employees can manage their finances effectively, they worry less and feel motivated to work.
Better financial decisions
By providing financial literacy for employees, organizations empower and equip their workers with the knowledge, skills, and resources to understand complex financial concepts. As a result, they make better financial decisions that enrich their personal lives and improve the organization’s monetary health.
Increase productivity
Per PwC’s Financial Wellness Survey, one in three full-time employees says money issues have affected their productivity at work.
By offering financial education for employees, you lift a major burden off their shoulders and create a positive work environment where they are physically, mentally, and financially healthy enough to contribute to organizational success. Since employees who aren’t worried about money tend to concentrate better on their work, they’ll see no reason to be absent. This leads to improved performance and increased efficiency.
Improve employee retention
According to Talent LMS’s report, 73% of employees getting financial literacy training from their company say it helps them feel more safe and secure. Similarly, 83% getting financial education for employees are satisfied with their jobs. This means that developing financial literacy for employees gives them more reasons to stay loyal to your company.
Beyond reducing attrition rate, investing in financial education for employees also attracts top talents to become new hires in your organization. How? It helps position your company as one that values its workers and is interested in their well-being and development.
When employees feel valued and satisfied with their jobs, they stay with the company longer and foster a positive employer brand image.
Read Next: 8 Tips to Increase Employee Retention
What is covered in financial education for employees?
Budgeting
This financial education for employees is a spending plan that estimates how much money workers will make and spend over a certain time, particularly a month or a year. Its goal is to help employees spend their money more wisely by allocating it to important items. This is necessary to ensure workers have enough money to cater to their immediate needs (shelter, food, clothing, car payments, etc.) and future desires.
Saving
Employees should be taught the art of setting aside money for future use rather than spending it immediately. It can be as simple as keeping some money in a piggy bank or a savings account that lets them earn interest on their money. By establishing a savings culture, workers can build an emergency fund or meet up with unexpected expenses like medical care, home repairs, or car maintenance.
Debt management
Kellye Guinan, Personal Finance Contributor on Bankrate, defines debt management as “a way to get your debt under control through financial planning and budgeting.” Its goal for employees is to lower their current debt and work toward ending it.
Though “debt” has a negative undertone, not every debt is bad. And employees need to understand this. For instance, bad debt occurs when a worker’s monthly expenses exceed their income. In this case, they may borrow or rely on credit cards for expenses, and suffer a high interest rate that poses challenges for repayment. On the other hand, good debt occurs when an individual borrows money for something that is expected to yield returns.
Offering financial literacy for employees empowers them to manage their debt themselves or through a credit counselor. They’ll also become more familiar with interest rates and how to incur good debt and repay their loans without ruining their finances.
Investing
Financial literacy training for employees also covers investment. Here, workers learn how to put money into certain schemes to make profits or generate income over time.
You can introduce employees to investment opportunities such as real estate, stocks, bonds, Exchange-Traded Funds (ETFs), mutual funds, or a commercial venture. Also, while educating them on investments, be sure to inform them on risk management strategies so they can have balanced investment portfolios and achieve their financial goals.
Financial planning
This is the main goal of financial literacy for employees. It encourages workers to take a comprehensive look at their finances and plan how they intend to reach their goals. It often involves planning for estate, tax, retirement, investment, education funding, philanthropy, and insurance. Financial planning ensures employees spend the right amount of their income on vital monetary matters without incurring debt.
How to improve financial literacy for employees?
To equip your employees with adequate knowledge about money, invest in the following:
Financial wellness programs
Employers implement these initiatives to address various aspects of financial education for employees. They help workers properly manage their finances, boost financial literacy, and improve their overall monetary health. The programs include workshops, seminars, investment advice, emergency relief, tax education, retirement programs, healthcare benefits, and more.
When developing these wellness programs, ensure they align with employee needs. Also, seek feedback, monitor usage, and offer incentives for participation. Doing this will ensure that all financial wellness programs are effective and utilized.
Read next: Understanding Employee Financial Wellness Programs & Their Benefits
Financial coaching
Schedule regular workshops, seminars, webinars, or 1-on-1 consultations with financial experts on crucial financial topics such as budgeting, investing, retirement planning, and debt management. Also, it’s best practice for each coaching session to be interactive by featuring Q&A sessions and group discussions to keep employees engaged.
Benefits education
Aside from salary or wages, employees might not be aware of the other forms of compensation your company offers, such as fringe benefits. However, through financial literacy training, you can help bridge the knowledge gap by educating them about health insurance, paid time off, retirement plans, and medical coverage, among others.
Financial tools and resources
Another way to improve financial education for employees is to introduce them to financial wellness software and resources that will positively impact their financial literacy. Examples include budgeting apps, financial wellness newsletters, tax planning tools, investment and savings courses, and others.
Investing in Your Employees' Financial Future
Financial education for employees is a crucial component for employee wellbeing and organizational success. Hence, investing in financial literacy for employees is a sure fire way to improve your business functions and drive growth.
Powering Asia’s fastest-growing, modern companies, Omni’s document management scales alongside your company so you can customize and leverage the system to store important documents for your financial literacy training.
On top of that, Omni also offers real-time graphs and easily exportable reports, streamlining performance reporting and reducing calculation times and errors. These tools empower HR teams to monitor trends on financial education for employees over time, compare results across various departments, and proactively identify areas for improvement.
To join the 83% of Omni customers who have unlocked new, actionable insights after using our solution, take a product tour with our team today.
