The Importance of Financial Literacy in the Workplace – Employee Benefits

Financial literacy aims to provide individuals with financial knowledge and help them make better decisions (Hustron, 2010). Crises occur on average every seven years: the mortgage financial crisis of 2008 and the COVID-19 health pandemic to name two recent ones. Personal finance and basic financial knowledge become even more essential in times of crisis. Consequently, employees are increasingly looking to their employers to provide this.

This article will discuss financial literacy in the workplace, its benefits, how to improve it, and its impact on the workforce.

Why is financial literacy important?

The UK lacks financial literacy and there is a clear need for more financial education. A study found that only 44% of organizations offer programs to help employees make more informed financial choices. Additionally, a survey of 2,000 UK workers suggested that UK businesses are not doing enough to support financial literacy (HR News, 2021). This affects the well-being of employees. Subsequently, a wellness strategy is key to improving employees’ financial literacy.

What are the negative implications of limited financial literacy within a workforce?

Financial stress can negatively impact the workplace. For example, studies have found that employees stressed about their finances say their worries about money are a distraction at work. In addition, it can lead to a decrease in performance. Additionally, 62% of employees called monthly expenses their top financial concern each month (Snell, 2017). Additionally, the financial burden leads to anxiety, depression, and other mental health issues. Therefore, financial literacy can help break this harsh cycle and increase workplace morale, business productivity, and reduce costs.

How can financial literacy be improved?

Employers can guide their team to increase their financial literacy. For example, podcasts, workshops, financial management tools, and book recommendations can point employees in the right direction.

Interestingly, 40% of employees surveyed did not know the total value of their other benefits and rewards. However, employees ranked benefits as the second most crucial factor after base salary when looking for a job (HR News, 2021).

Rewards and recognition can help employees save money. Providing personalized benefits to employees can contribute to financial and, therefore, mental well-being (Benton, 2021). To name but a few: bonuses, pensions, health insurance, vacations, skills development, staff discounts, employee checksautomated savings and employee reward programs can all help drive sustainable financial development. Recognizing employees for their hard work will also increase employee loyalty.

Improving organizational financial literacy will lead to happier, healthier and more motivated employees.

Benefits

Businesses benefit from improving employee financial literacy. For example, it leads to increased productivity, better retention and contributes to better profitability. Meanwhile, it reduces stress and decreases stress related to absenteeism (Nikolovska, 2021).

1. More attention and profitability

Improving the personal situation of an employee gives him a better state of mind and increases his productivity.

2. Reduces stress

Being in debt and under financial pressure is stressful. Financial literacy alleviates this anxiety by empowering employees with knowledge. Therefore, it gives employees the skills to take control of their finances, understand positive solutions, and distinguish them from dangerous ones.

3. Less absenteeism

Absenteeism is the practice of avoiding work. If employees can manage their stress and feel healthier and happier, that should lead to less absenteeism.

4. Improved retention

Offering advantages that few competitors offer improves employee contract with the organization and increases their loyalty. Custom awards and recognition can help employees get the most out of their monthly salary (eg cash back, savings, pension).

5. Employees develop themselves

Continuing education is often expensive. Research has found that 60% of the workforce lack basic job skills (Nikolovska, 2021). Financial well-being intensifies the importance of continuous training and motivates employees to further develop themselves.

Impact on the organization

Overall, an employee financial wellness program can enrich employees with the skills needed to make better financial decisions. In addition, it can reduce their stress and improve their performance and productivity at work. A supportive culture is imperative to attracting top talent and is key to organizational success.

To learn more about how each person can improve your financial literacy in the workplace, visit eachperson.com or contact us at [email protected]

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Sources:

Benton, L., 2021. 5 Ways to Improve Financial Literacy in the Workplace – Liberty Mind. [online] Freedom of spirit. Available on : [Accessed 6 October 2021].

HR News. 2021. UK employers lack financial education, new research finds – HR News. [online] Available on : [Accessed 6 October 2021].

Huston, SJ, 2010. Measuring Financial Literacy. consumption diary, 44(2), pp.296-316

Snell, P., 2021. Teach Your Staff Personal Finance Skills | Insights and expert views. [online] KnowledgeBrief. Available on : [Accessed6October2021[Accessed6October2021[Consultéle6octobre2021[Accessed6October2021

Sarah J. Greer