3 Reasons Why Your Employees Should Be Financially Literate
Are your employees financially literate?
PHOTO CREDIT: Getty Images
Financial literacy is a vital life skill, but unfortunately, many Filipinos still lack even the most basic knowledge needed to make sound financial decisions. The Philippine Daily Inquirer reports that in S&P 2014 Global’s FinLit Survey, which ranked 140 countries in terms of financial literacy, it was revealed that the Philippines ranked as one of the 30 least financially literate countries in the world—only 25% of adults in the country knew the basics of money management.
“We need to empower Filipinos to take charge of their financial health, and it starts with financial literacy,” Junie Veloso, Head of Business Banking at BPI, says. “This will be key to ensuring the bright future of our economy.”
The workplace is one of the most effective venues to teach financial literacy; The International Foundation of Employee Benefit Plans says that financial education in the workplace can help employees learn how to manage their savings in the short term (e.g. credit, saving) and the long term (e.g. retirement). Businesses can implement programs and systems that would teach employees how to save, invest, manage income, and prepare for the future.
But what’s in it for employers? Quite a few things, actually.
1. Financial literacy decreases workplace stress
When people fail to plan for their financial future, you can bet that financial stress and anxiety will be lurking just around the corner. Because of a failure to plan, so many Filipinos live from paycheck to paycheck, spending more than they can afford and finding themselves deep in debt.
By giving your employees the tools they need to be financially literate, you’re letting them take back the control of their life. And by educating them, you’re not only empowering them, but also boosting your company’s business. Employees can focus more on the tasks at hand instead of worrying about when is the next payday. And instead of working for the sake of getting a salary, employees can start thinking about their career goals and how they can best work towards them.
2. Financial literacy boosts productivity
Financially stressed people feel like they don’t have control over their future, and this anxiety can spill over to their job performance. Many studies have shown the negative effects of stress on productivity—stress has been linked to absenteeism, accidents, diminished productivity, employee turnover, and more.
Learning how to manage money is an important skill that can help get rid of financial stress. The more money-savvy and stress-free your employees are, the better they’ll perform.
3. Financial education can increase loyalty
Implementing learning programs in the workplace shows your employees that you are invested in their success, in and out of the workplace. Pay is often a major source of dissatisfaction among employees, but because financial literacy teaches workers how to properly manage earnings, it can help them take control of their financial future.
“Financially secure employees are more likely to stay with their company,” says Veloso. “That’s why more businesses should make efforts to educate their employees about making good financial decisions.”
Every entrepreneur should start thinking about doing his or her part in instilling financial wellness in every Filipino.