Financial literacy matters too
Financial literacy is just as important for your employees as reading, writing, maths and communication. Without it, your business performance will suffer.
Financial literacy is about understanding money and how to make it work well for you. This skill is just as important for your employees as reading, writing, maths and communication.
Employees need financial literacy skills to manage money, make decisions about savings and debt, prepare budgets, understand financial risk and plan ahead. If they don’t know how to do these simple things, they may well be distracted by money worries and unable to focus on their job.
Financial literacy is different from numeracy. Numeracy is mathematical knowledge including measurement, time, fractions, geometry, probability and statistics.
When your employees don’t understand money matters
Without financial literacy skills, your employees may struggle to:
- analyse, interpret and report financial information
- order stock
- predict costs
- check their pay slip
- discuss money and financial issues
- prepare for retirement
- understand KiwiSaver
- set financial goals
- take up promotion or learning opportunities.
There is a personal cost for employees that impacts your business. Employees may experience health issues if they are under financial stress or are in an unmanageable debt cycle.
The consequences add up
The risk to your business from employees lacking financial literacy skills is considerable – and poor business performance is the result.
Your business may suffer from:
- poor financial record keeping, budgeting and planning
- financial mismanagement
- a lack of financial information to support management decision making
- an inability to delegate financial decisions
- theft by employees
- absenteeism and loss of productivity due to employees’ personal financial stress
- constant requests for salary advances.
The good news is that there are resources available for you to help your employees with financial literacy.