Personal Finance » Financial Education

How financially literate are your employees?

November is Financial Literacy month and it’s a great time to talk about the merits of improving financial literacy among your workforce.

Money stress

Money problems have become the biggest contributor to personal stress and it has started to affect productivity in the workplace.

According to the Sun Life Canadian Health Index, financial stress ranks as the highest stress of the big 4 stresses over relationship stress, work stress, and health stress. The report also suggests that “tow of the top four sources of stress relate to employment status.”

Here’s the results of the Sun Life Study:Which of the following areas are causing you to experience a level of stress you are uncomfortable with?

  • 44% said personal or household finances
  • 30% said personal relationships
  • 26% said my work life
  • 26% said personal health issues
  • 12% said caring for dependent children or parents
  • 7% said other reasons
  • 28% said nothing is causing me stress at this time

What would you say?

Do you have a will?

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Economic stress

Our economy and economic times have also added to financial stress. According to Rob Carrick personal finance expert for the Globe and Mail, Financial Stress is catching up to us, “Four years of weak economic growth have driven stress levels higher – particularly among young adults who are having trouble finding jobs where they aren’t underemployed, or finding jobs, period.”

Carrick also suggests that money stress has been unavoidable for most of us since 2007, but it’s mainly been talked about in terms of how much our investments have lost or how little they’ve made. Now, a more generalized sense of financial angst is starting to emerge.”

A little money management goes a long way

According to another study by the Canadian Institute of Chartered Accountants (CICA), “A lot of unnecessary stress could be eliminated with a greater focus on personal finances.”

  • 61% of all survey respondents admitted to having money worries.
  • 67% of all respondents wished they were better at saving
  • 96% felt that developing and sticking to a budget is essential for responsible money management.
  • Ironically, 77% have developed a household budget but only 32 per cent of those with a budget always stick to it.

“The president of CICA, Kevin Dancy, says “Financial decisions do matter, so it pays to invest time and energy into managing your personal finances. Canadians who display discipline when it comes to money management experience less stress.”

Dancy also notes, “The survey results sent a clear message – Saving more, spending less and developing a budget and sticking to it will go a long way in providing some peace of mind.”

The bottom line is record levels of consumer debt and non-existent savings rates are keys in casuing and therefore reducing financial stress.

Financial education in the workplace

All these factors play a big role in the increasing problem of financial stress. Couple these studies with the reality that there is very little formal financial education provided in our country and you can’t help but recognize a very serious concern in our society.

Dealing with money is a learned behavior. It’s not natural. There is no such thing as the savings gene. The big problem is there are few opportunities for formal financial education. We are not learning about it at school and we are not learning about it through work.

Although there is tremendous interest in putting more financial education into the school curriculum, it’s been talked about and discussed for decades. People are not learning about money properly and some leading edge-employers are taking the lead in helping their employees learn to make better financial decisions.

Employers are now playing a bigger role in building awareness and educating their employees on fiscal wellness, retirement, and investment planning. Employers need to rethinkemployee benefit plansand incorporate Financial Education as an essential part of those benefit plans. Most group retirement plans focus solely on product and plan education. Innovative companies are now incorporating health and financial wellness into their benefit programs, but generally, there is still a void in Financial Education.

In our workshops, there is no doubt that employees appreciate employers who help them take control of their money not only through traditional benefit plans but also through financial knowledge and education.

Financial Education starts by helping employees understand how their employee benefit program is a key component in their financial affairs. That being said, a great plan also emphasizes that true financial success comes from understanding more than just the benefit program from work. Financial Education helps employees achieve financial success by harmonizing their benefit plans at work and in their personal financial affairs.

I am a big believer that great financial education programs go a long way in making employers look good. I also believe that our workshops continue to grow in popularity because there is a massive appetite for Financial Education especially given the demographics.

Financial Education should be at the core of any financial benefit plan. Aligning the employer, employee, and the benefit plan is essential for the financial and professional success of your organization.

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