Financial education is increasingly essential, and not just for investors. It becomes essential for the average employees to help them balance their financial budget, buy a home, fund their children’s education and ensure their savings after retirement. However, the growing sophistication of financial instruments (such as bank loans, credit card, personal savings, etc.) could confuse individuals to choose which plans would be suitable for their future. This variety of options can also affect negatively to individuals’ choice if they are not financially literate.
As reported by OECD, individuals might not be able to choose the right savings or investments for themselves, and even at risk of fraud, if they are not financially literate. When these individuals become financially educated, they will be more likely to save and challenge financial service providers to develop products that truly respond to their needs. Consequently, there would be positive outcomes on both investment levels and economic growth.
Individual workers are responsible to manage their own finances, such as on a holiday or save for new furniture, how much to put aside for child’s education or to set them up in life. However, constant economic development has made it more difficult for people to hold their financial responsibility alone.
Based on the International Foundation survey, the biggest financial challenge (70 percent) faced by employees is credit cards and debts. Also cited by employers as top issues worrying their employees are saving for retirement, paying for children’s education expenses and covering basic living expenses. The survey found these factors are taking a toll on the workplace in the form of stress (79 percent), inability to focus on work (64 percent), physical health concerns, and absenteeism (34 percent). Therefore, since financial illiteracy affects employee’s performance, employers should help employees to be financially savvy by supporting employees with financial education programs as an employee benefit.
Offering financial education, employers can have a wide variety of topics, from life insurance and identify theft to student loan debt and end-to-life planning. According to the International Foundation survey, most businesses that want their education program helps make an impact on employee’s life can try the following steps.
Further, employers can also conduct an event focusing on financial education that highlights the following points:
All in all, workplace financial education can support employees in developing skills to manage their wages in the short term (credit, saving, debt) and over the long term (managing for retirement). This benefit is also not one-sided because employees who are less burdened by financial stresses are more productive, positively inclined to you as their employer and less absent and stressed from work.
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