According to a 2020 study by the NAFI Analytics Center, financial literacy among the Russian population was not high, estimated at 12 points out of 21. Except for the hours of sleep, people spend one-third of their lives at work with coworkers, managers and partners. This is why it should be helpful to teach adults responsible personal finance management in the workplace. What benefits for businesses can employers reap by taking care of their employees’ financial literacy and wellbeing? What learning options are available?
Money is the biggest source of anxiety for the majority of the population. And yet, not all people realize how important it is to tend to their own financial health.
The issue of financial wellbeing in the corporate environment has become popular over the past few years because employers have noticed a direct connection between employees’ state of mind and their income.
According to a study conducted by Gallup, people who thrive is the five elements of wellbeing – physical wellbeing, financial wellbeing, career wellbeing, social wellbeing and community wellbeing – give the best performance. In particular, it has been proven that employees with a low level of “financial stress” are more loyal and productive. Therefore, employers begin to care more about the wellbeing of their employees in general and also introduce educational programs and trainings on managing personal finances, developing economic thinking, learning the rules for managing money, and programs to support employees.
Financial fitness is now extremely popular both at the level of companies and the state in general. In 2019, the National Center for Financial Literacy developed a program, Financial Literacy in the Work Area, as part of a project of the Russian Finance Ministry and the World Bank, Raising the Level of Financial Literacy of the Population and Financial Education in the Russian Federation. Many companies have taken part in it for free. It is a quality program that reflects the real situation on the market and is conducted by methodologists and experts from the Finance Ministry. Consultants visited enterprises and held educational sessions on financial literacy for the staff. Until recently, any company could file an application and receive the service.
This year, the Finance Ministry and the Bank of Russia managed to set up an efficient work of a large number of agencies devoted to financial education. Regions now have their own educational programs, and many of them have special monitoring agencies and regional centers of financial literacy.
Both in regular and financial fitness centers, beginners need to receive basic knowledge, start small and then move on to bigger goals. The employer can help them using various mechanisms.
Employee support programs
Certified experts hold educational financial consultations so that employees will learn to manage their money. The experts also help them in dealing with private financial issues. The two subjects are the most popular: personal financial planning, when the expert teaches to manage the budget, and investment and savings when the expert helps the employees understand the changing market environment and conditions, as they are not always transparent.
Our company was among the first to launch financial consultations as part of employee support programs. We see a surge in demand for such sessions, and particularly during recessions and financial crises. When the pandemic started, we observed a threefold increase in the number of consultations as people were experiencing financial difficulties, then the key interest rate changing at the time. Now, amidst the new reality, the amount of such consultations has doubled.
Online courses and marathon sessions
Online financial literacy courses are available for companies in the market. This is convenient as regards comfortable learning, yet there is a difficulty with involvement in the program. We offer such a course as well; for certain companies, we hold it as a Telegram marathon session. Before launching the session, we create a group that includes the client’s company employees plus a financial expert who stays in touch with the participants on a daily basis and provides feedback on issues of interest. We conduct tests for employees in the group, offer links to webinars, and share useful information. One of our latest chats involved some 400 active users who took this course during a two-week period. At the end of the course, participants take a test. Also, to boost interest in learning, we offer giveaways for employees that can include a coaching session.
Engaging a financial expert
Companies can invite private financial advisors for training their personnel. For instance, our employee support program includes lectures on personal finance management. Sometimes companies request our financial expert to host a webinar for their employees. We organize these meetings to give people a basic understanding of financial literacy and what to do about it. Pension programs can be introduced as a training tool in companies in this regard as well: this will prompt employees to think about their pensions and learn more about making retirement savings. A financial expert will help you see into this matter.
The formation of financially competent behavior is increasingly becoming a priority task supervised at the federal level. This is because financial literacy of employees is more than just a matter of their personal financial security; it is also a key factor in the economic development of the companies they work for. Amidst the latest several crises, people began making savings and calculating the emergency fund more often. Fortunately, in recent years, there has been a general trend towards a greater financial literacy of citizens, with an increasing number of publicly available corporate training programs on money management for every manager to choose the most efficient format for his team.
By Darya Fedorova, Co-Founder and Executive Director, Ponimayu corporate wellness platform; ACSTH ICF coach