How the financial literacy of your people could be harming your organisation. A Five- point plan to changing that.

The Financial Times reported earlier this year that over half of British employees are embarrassed about their Financial Literacy.

68% of HR professionals say they have received requests for financial education initiatives from their employees.

The report also finds that three in four teachers say most students leave school or college without key financial skills.

This is no surprise given the level of financial literacy education in the UK is as good as non -existent.

If so then it is reasonable to surmise that this has been the case for decades with millions of people in the same boat when they left school, having to learn how to navigate life's financial maze themselves.

I remember opening my first bank account, it was nerve wracking.

As I trundled along after graduating, getting into the REAL world of work … I had no idea what the right account was, what was the right savings plan for me, what I should do to save for a mortgage, what APR meant on a loan, what the dangers of maxing a credit card were and the chaotic consequences of a debt spiral caused by paying the minimum amount each month would result in.

I didn’t understand the important differences between priority and non-priority debts and how not addressing this would hit me hard for years to come when it came to getting a mobile phone contract, never mind car finance or a mortgage.

Then there were Pensions!

Woah a whole new level of jargon. Basing my decision on what my Dad told me to do even though I didn’t have the foggiest …other than I was giving some of my wage away. Never paying attention to it over the years because I was told it was a good one, so I trusted to that.

Tax codes. Tax what! I didn’t have a clue.

It’s all okay until something happens. Yet when the proverbial hits the fan, then it falls apart … quickly.

County Court Judgements (CCJs), Insolvency, red letters, court letters, the panic sets in, can’t think, can’t act. Just hide away, head under blanket, letters pilling up.

Eating to soothe my pains. Thank goodness it wasn't booze or hard drugs.

The misery, the anger, the guilt, eats away at your being.

The weight of it all, the embarrassment, the feeling of worthlessness mixed with just how stupid one could be. It's easy to take it out on yourself and others around you.

The cost-of-living crisis has pushed Thrivers into Survivors, Survivors into Crisis, and those in Crisis into deeper poverty.

This could be the reality for your people too.

Would you know if it was?

The lack of money knowledge, money skills and money mindset affects our psychological wellbeing.

It could manifest into what might seem obscure or even non-related matters, such as how we view; ourselves as people of value or worth, our ability to progress in life, the decisions we make (or rather don’t) because of our lack of knowledge, nervousness or apprehension to seek guidance and support out of fear of embarrassment, judgement or I’ll leave it to another day because …”

This often plays out in a myriad of ways including limits we place on ourselves, our abilities and earning potential, not managing our financial priorities, not understanding financial products or services, not planning effectively for the future and not seeking timely advice and support when difficulties arise.

Today’s reality

75% of people surveyed have money worries at least once a month, putting people’s mental health at risk.

People in debt are 3 times more likely to have a mental health issue than those who are not in debt.

This impacts on work. People’s worries don’t conveniently stop at home.

Why this matters to employers

Employers suffer, with increased absenteeism, presenteeism and leavism issues for fear of loss of work, income or credibility.

Employees stress levels rise and if unchecked can lead to chronic mental ill health issues and the downward spiral extends into living hell.

Productivity, performance and ultimately profitability are all negatively impacted.

It's costly for managers and HR time as resources are pulled into dealing with performance and productivity issues. Grievances and personnel issues are at risk of arising making tribunal threat a greater risk to the organisation.

Can anything be done to mitigate risk and contribute to a flourishing work environment?

In short yes.

Create it's a good to talk money, Financial Wellbeing Culture.

A Five point- plan to support your employees financial wellbeing and safeguard business outcomes.

1.      Have a Financial Wellbeing Policy. It's there, cast in print and followed up by action. It sends a clear message to your people, that YOU are serious about their financial wellbeing. This should come from the team at the top.

2.      Have a Financial Wellbeing Strategy with a senior leader accountable for it. Include progress as fixed agenda item for senior leadership or Board meetings. This means there is focus, drive and commitment. Measure and review.

3.      Train and empower middle management, team leaders and supervisors to have meaningful, empathic and supportive conversations with their teams where they have the confidence to provide guidance and at the very least be confident in signposting to organisations who can help. This links employees throughout the organisation and helps develop an empowering Financial Wellbeing Culture that makes it easier and psychologically safe to talk money.

4.      Create an Employee Financial Wellbeing Programme, which is built from the bottom up, based on the circumstances and needs of your people, driven from the top down. This should include at a minimum three elements (i) Data on your staff in how many are in CRISIS, SURVIVAL and THRIVING mode (ii) Financial Literacy educational training, from; budgeting, money management, income maximisation, debt to future financial planning and (iii) access to practical support.

5.      Your own Financial Wellbeing First Aiders who have practical skills to help people navigate the tools and resources depending on your employee’s needs. Think of your Financial First Aiders like Mental Health First Aiders.

Empowerment is knowledge applied

Saleem Shafi is founder of Money Beam and former Deputy CEO of award- winning financial wellness charity-Money Buddies. He has guest spoken on national media including BBC, GMBTV and Sky on Financial wellbeing, debt and money guidance.

Want to see more on how to get the Five-point plan into place for your organisation?

Contact saleem@moneybeam.uk

#workplacewellbeing #financialwellbeing #talkmoney #financialwellbeingfirstaid