Financially Literate Employees = Higher Profits

I have been conducting personal finance education training since 2004 and so far it has been a bumpy ride. Employers tend to question spending on teaching their employees personal finance skills that are not directly related to their work.  Plus, many employers feel that giving a salary or wage already fulfills their role of sending their employees on the road to financial freedom.

Well if this were so, why is it that of the thousands of people that my company has trained on personal finance, 72% found themselves with money problems in one form or another prior to the training?  What is more telling is that 22% considered themselves to be in great financial stress.

Studies have shown that employees tend to be less focus at work when they face added stress from financial burdens.  The mind wanders from work in what is called absenteeism.

Salaries and wages may help in becoming financially free.  But money is a double-edged sword that can lead to financial disaster if not properly handled.  And this is why personal finance training is needed. Without such training, an employee faces challenges from:

• overspending arising from the hype over consumerism,
• back-breaking amortization payments on easy-to-access but high cost debt,
• inadequate protection against risks to life and property, and
• the arduous task of creating, growing and passing on wealth.

Such challenges, when improperly addressed will lead to what is probably the greatest pilferage in companies today, that of the pilferage of time.  And lost man hours mean lower employer profits.

Employee financial stress will manifest itself in more ways than one, such as in the following:

• unscheduled vacation leaves
• repeated sick leaves due to simple illnesses
• active availment of healthcare benefits
• low quality output from increased production rejects or below standard research and reports
• poor performance by a salesman relative to the average for his team
• high new-hire training costs arising from high employee turnover

Teaching money management skills and not giving away more money is the answer.  Personal finance lessons can:

• enhance company loyalty – as they send the message that a company cares about its employees’ wellbeing;
• lead to better appreciation of and participation in company benefits;

• foster employee retirement readiness – as a financially secure employee will be more likely to accept an offer of early retirement; and
• promote overall high employee engagement.

Personal finance trainers abound from stand alone, independent companies to financial planners embedded with product providers.  They are just one Google search away.

So think twice about thumbing down a personal finance training proposal. These trainings may just mean time well spent for employees and money well saved for the company.

(Originally written by Efren Ll. Cruz, RFP at http://www.savingstips.com.ph)