Think your employees’ personal finances are none of your business?
The truth is, your employees’ financial stress may impact your workforce in negative ways. After all, an employee’s money woes can become a costly problem for the company. Thus, improving their financial literacy can benefit employees and employers alike. What’s more, it can even help you create social impact and lasting value.
Why Financial Literacy for Employees Matters
Financial literacy is indispensable.
It’s the ability to understand financial skills—such as budgeting and investing—and use them effectively. It’s especially crucial in the current economic state, which is causing unprecedented financial stress. Financial stress can lead to a slew of other issues, such as physical and mental health problems. And financial literacy can break that rigorous cycle.
Indeed, these tough times amplified the importance of financial literacy. With that said, here are three specific reasons financial literacy matters in the workplace.
Boosts productivity
Financial problems could distract employees from their work. The result? Dips in productivity, frequent absenteeism, sloppy work, dissatisfaction, lack of engagement and enthusiasm, and decreased commitment to the company.
While financial literacy will not solve all their financial problems, it could make employees more financially savvy. That can help them minimize their problems and mitigate the effects. Reducing financial stress can boost productivity and efficiency since employees will be able to focus more on their work and perform at a high level rather than worry about money issues.
Saving money
Perhaps you didn’t know that financial stress could also lead to presenteeism, a phenomenon in which employees are present but aren’t performing at full capacity.
Both absenteeism and presenteeism can cost your company a whole lot of money. The cost can be quite staggering as well. But you can lessen it by reducing your team’s financial worries. You can also minimize other stress-related conditions, such as physical health issues, and save your employees and company in healthcare costs.
Improves employees’ business acumen
Financially literate employees are not just money savvy—they’re also business savvy. After all, financial literacy allows them to gain a nuanced understanding of the interplay between money, people, technology, and business processes. Then, it’s no wonder financially literate employees improve business performance with their increased business acumen and better performance.
Thus, your team is likely to act responsibly, knowing what they do could impact the company’s financial health. It also helps them make informed decisions that benefit the bottom line.
How to Build Financial Capabilities for Employees in a Social Enterprise
When it comes to empowering your employees financially, there are many ways to improve their financial literacy. Doing so can boost their financial well-being and even create financial leverage for your company, allowing you to grow and create social impact.
Provide financial education
Increase your employees’ access to financial education by offering financial wellness benefits. It provides them with the space to learn more about relevant financial topics. It may come in many forms, such as online courses, in-person training, or printed materials. What’s important is that you make sure these educational resources are accessible to all your employees.
Raise awareness about these educational resources so that your employees can use them. You could also offer various formats to match the specific needs of your employees.
Offer financial tools
Financial tools are a great way to encourage employees to use the financial knowledge that they acquire. There are many types of tools you can offer, such as budgeting apps. You can use incentives and social activities, such as financial health support groups, to motivate employees to actually use the tools you’re offering.
Provide professional support
Professional services, such as financial counselling, can be offered as part of financial wellness benefits. In these services, you can tackle financial topics, including:
Checking
Managing credit
How to maximize savings
Understanding loans
Debt management
Having access to an expert who may answer questions or explain tricky concepts is an effective way to improve employees’ financial literacy. It will also help them break bad financial habits, so they can become more financially smart and empowered. As an employer, you should also take measures to normalize the conversation and set an example.
Set up an employee financial wellness program
Financial wellness programs must be personal and comprehensive to be effective. You will need to provide each employee with a clear picture of their financial health and support to take care of their short and long-term needs.
Here are some steps you can take to set up a financial wellness program:
Establish goals for your financial wellness program.
Gather feedback from employees on what financial topics are most valuable to them.
Determine what your program will cover.
Design your program.
Find out how you will provide information and resources to employees.
Finalize the components of your financial wellness program.
Decide if the program will be mandatory or optional.
Empowering Your Employees and Company Financially
When employees walk through your doors, they bring their financial concerns with them.
In the long run, employers will benefit greatly when employees have financial security since that has a big impact on their physical and mental well-being. Providing them with the proper financial literacy education helps them gain better control over their finances and perform better. All these result in a positive company culture and an improved bottom line.
Less stressed, more productive, more engaged, and financially savvier employees? That makes dollars and sense. Connect with a virtual CFO at Profit Reimagined to find out how to improve the financial literacy of the employees in your social enterprise.