Against the backdrop of The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, employers are recognising the need to do more to support financial literacy in the workplace.
According to a survey by Willis Towers Watson 28% of Australian employees have no significant savings and are living from payday to payday. While major financial stress typically flows from mortgage pressure, credit card debt, and inadequate super for retirement, the cost of living is now a contributing factor.
Figures from the Australian Bureau of Statistics show slow wage growth at 2% competing with substantial hikes in the costs of some essentials like electricity (up 12.4%), hospital services (up 5.4%) and health insurance (up 3.95%). This is putting more families than ever under financial pressure.
In fact, the Willis Towers Watson survey says a quarter of the total Australian workforce is performing at sub optimal levels because of financial concerns. At work, financial stress distracts individuals from fulfilling their work commitments to the best of their abilities, which impacts their performance on the job. Ultimately, financial stress can create significant costs for employers in the form of lost productivity, increased absenteeism, and presenteeism.
At a time when financial literacy in the workplace is found wanting across all generations, there’s a significant opportunity for employers to step in. By bridging that gap, you can positively influence the financial wellbeing of your employees and in turn increase engagement and productivity.
Practical things employers can do
By helping your employees become better educated about financial topics you can go some way to alleviate employee financial stress and improve morale at the same time.
To maximise financial literacy in the workplace, design your program around the unique financial needs of your employees.
As we mentioned in our post on making financial health part of your employee wellness program, you need to consider a number of social, economic, and cultural factors.
And this means, a one-size-fits-all approach doesn’t work. It’s essential to zero in on the particular financial needs of different generations:
- Baby Boomer employees’ financial needs are focused on handling unexpected life events and securing income for later life.
- Generation X needs help with saving for future financial goals and salary sacrificing.
- Millennials have needs around learning to budget, and paying back education debt.
Financial literacy doesn’t need to be confined to education. You can also get creative and extend employee benefits to include offering practical and direct assistance to support key life events.
Likewise, it’s important to recognise the very different superannuation education needs of these generations. While Generation X and Baby Boomer employees will be more interested in maximising retirement savings and making additional super contributions, for your Millennial employees, it’s much more basic.
This cohort has shown very little interest in superannuation even though it has the potential to be one of their largest assets. So, getting this cohort interested in super in the first place is no small task, but it’s a great first step in helping your Millennials employees take positive actions to improve their financial health.
Remember, employees who are financially stressed are often distracted, which affects absenteeism, productivity, retirement, and healthcare costs.
By helping your employees achieve financial wellness, it not only drives value for your people, but can make a big impact on your organisation.
Enhance financial literacy in your workplace with Flare
Promote financial literacy and good financial habits using Flare’s Financial Wellbeing services. With Flare, you can also give your employees access to financial products with attractive rates, and help them better manage their overall financial health.
See how our platform can help you improve your employees’ financial wellbeing.