More than half (59%) of employers consider poor financial literacy as a major workplace financial wellbeing risk, according to research[1]. A further 47% of organisations cite financial literacy as a challenge for improving financial wellbeing for the majority of the workforce.
Jonathan Watts-Lay, Director, WEALTH at work comments;
“Unfortunately, it’s well known that when individuals do not fully understand their finances and how to address current difficulties and mitigate potential risks, it can result in stress. In turn, this can lead to lower employee productivity and is a major workplace risk.”
A study by the Centre for Economics and Business Research, reveals that 10% of full-time and part-time employees missed work because of financial worries, while 18% acknowledged reduced productivity.[2]
Watts-Lay continues; “Not only this, but a lack of understanding of their finances and financial management could result in employees making poor decisions which can prove very costly, especially at retirement when people are faced with complex decisions about what to do with their retirement savings.
Helping employees to understand the key financial issues that relate to them is an effective way of overcoming the risks of poor financial literacy. This is because when employees feel in control of their finances, their overall wellbeing is greatly improved. A commitment is therefore needed by employers to provide workplace financial wellbeing support including education and guidance to help employees avoid some of the financial challenges they find themselves tackling at different stages of their lives.”
He adds; “This means offering financial education programmes that help employees with a full range of money matters throughout their career including ways to manage a budget, save money, manage debt, boost savings and prepare for retirement.
See WEALTH at works tips to help employees improve financial literacy
1. Empower employees with knowledge
Whilst some information may be provided via a website or leaflet, actually attending an interactive financial education workshop about the financial issues that relate to them is far more engaging. This is why increasing numbers of employers are using either virtual or face-to-face seminars. One-to-one financial guidance or coaching sessions are also becoming a more popular form of support and is particularly useful for those who need a deeper level of knowledge. These could be delivered via a video call or via the telephone and can really help people understand what their next steps should be and help them decide if they would like further support such as regulated financial advice.
2. Offer a range of support
As everyone has different financial needs and priorities, support should be tailored to cover all life stages and a mix of needs such as debt management, building up an emergency fund and saving for a first home, as well as retirement.
Also, whether companies have staff that are office based, in the field, on a production line, working shifts, or even overseas, financial wellbeing support must also be accessible to all to optimise buy-in and boost employee engagement. Offering a range of delivery methods for financial wellbeing support can also ensure the majority of employees are always supported. This could include classroom based financial education sessions, interactive online seminars, or even webcasts and digital tools including a ‘Financial Healthcheck’ that can be used anywhere, on any device.
3. Bring in a provider
An increasing number of employers are now turning to specialist workplace financial wellbeing service providers to help individuals build their financial knowledge and improve their financial wellbeing throughout their career. Taking an active approach and supporting employees to improve their financial literacy with the help of reputable firms, which in turn will lead to a more financially resilient workforce, is a win win for all!
[1] Financial wellbeing research 2022: navigate financial resilience for a sustainable future – REBA & WEALTH at work
[2] https://cebr.com/reports/financial-wellbeing-and-productivity-in-the-workplace/