Financial literacy is a term you may be hearing more and more these days, but what does it actually mean?
Put simply, financial literacy is the level of knowledge you need to make well-informed decisions about your finances. Rather than a random stab in the dark, you’re equipped with the right tools (and the confidence to use them) to look after your money in a smarter way.
Everyone needs a good level of financial literacy, regardless of where they are in life. Employers have a responsibility to provide helpful resources to collectively raise the nation’s level of financial knowledge.
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Improved levels of financial wellbeing can elevate mental health
One of the main contributors to poor mental health is stress. Based on Claro’s Financial Wellbeing Report, the top source of stress for employees is money, at 43%. When stress is heightened, our mental wellbeing deteriorates, as our thoughts are consumed by worry. Money is a common source of stress for many people, particularly at the moment as the cost of living continues to soar.
To alleviate some of the money-related stress that employees are currently experiencing, companies can provide financial wellbeing benefits that educate people on the best way to handle their money and safeguard the future. That newfound level of confidence will trickle into everyday life, especially in the workplace.
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Removing everyday financial stress can result in increased productivity at work
When you’re distracted, your performance at work tends to suffer. Almost nine in 10 (86%) employees say that money worries impact their work performance. Employees under financial stress are more likely to take sick days and spend time handling their finances during the workday, spending the equivalent of 3.5 days a year at work, on average, trying to sort out their bills and other money tasks. As a result, productivity plummets, and up to five days per employee a year are lost due to spending time on personal finances.
One solution to tackle the problem, and potentially prevent it from becoming more consuming, is to lay the foundations for financial confidence. With a good level of financial literacy comes a sense of calm regarding finances. Employees will be more engaged with their work if they have the head space to do so. Their biggest concern will be what to have for lunch, or whether a third coffee is a bad idea.
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Showing that you care about supporting financial literacy can boost morale
Some 69% of employees feel their company should do more to support their personal finances. A happy workforce is one that feels listened to and respected. Showing that you care for your team, both in and outside of work, can go a long way in nurturing good relations between both sides.
The whole point of a workplace benefits package is to balance retaining existing talent and attracting the best that’s out there with promoting a happy life. This is done through providing useful perks in addition to salary, which usually encourages health and achievement.
Employees that are healthy and happy in all aspects of their life, finance included, will contribute positively to the business and be the best versions of themselves. Plus, they may even learn a thing or two that can be applied to their day-to-day work.
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Workers are more likely to stay in a place where they feel valued and cared about
When headhunters prey, it’s easy to be swayed. All it takes is a seemingly-innocent LinkedIn message to pique interest with an informal ‘coffee and a chat’.
Put yourself in the shoes of the employee. They’re being lured into a new organisation with a higher salary, more senior role and potentially a more alluring benefits package. But the new company doesn’t have what you have: familiarity.
The fear of the unknown is what keeps people from taking a risk, be it in their career or otherwise. If your employees are happy in their work life and feel as though their employer truly cares about their wellbeing, your job is done. Higher salaries will always exist elsewhere, but reputation often trumps cold, hard cash.
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Top-tier talent will be more attracted to a workplace that cares about their team’s wellbeing
Similar to the previous point, you’re now on the other side of the coin. We know that your best bet to retain existing talent is to provide a positive place to work and grow, but what about expanding the team? People are looking beyond salary when it comes to accepting a job offer. More than three-quarters (76%) of workers say that if their employer offered a financial wellbeing benefit, they’d use it. They want to be happy in their job, and outside life as well.
By boasting that you offer financial wellbeing support, you’re sending a clear message to applicants that your company cares about its staff, not just during the work day. You’re going beyond the 9-5 and giving real life benefits. When it comes down to it, the people that are motivated by money will always go for the higher salary, but those that put more emphasis on personal growth will take note (and hopefully, the job).
Ciara Knight
