Are you as an employer or Human Resource (HR) manager responsible for employee financial literacy?

This was a question we asked in a previous blog post and also something which Kelsey discussed with Simon Brown from JustOneLap who is passionate about developing financial literacy in South Africa.

There is no question that organisations benefit when their staff have developed baseline financial literacy and financial habits and we believe it is key to invest in this area.

Kelsey chats to Tamlyn Nel about the importance of employee financial literacy

In her latest interview, Kelsey chats to Tamlyn Nel, Director of Operations at LE Empower We, who unpacks the importance of employee financial literacy.

Tamlyn Nel talks to Kelsey about the importance of financial literacy for employees

Why employee financial literacy should matter to you as an employer

Employers and HR managers often have to walk a fine line when conducting financial education or financial literacy initiatives as money is often a very contentious and personal subject for people.

The average South African has been under significant financial strain over the last couple of years as a result of the COVID-19 pandemic and we believe that one of the easiest wins for business owners and HR teams is to invest in employee financial literacy.

Here are just a couple of interesting data points that might inform your thinking here:

Reason Number 1 to invest in employee financial literacy: We don’t have enough retirement savings

Recent research from Genesis Analytics highlighted:
“Genesis Analytics noted only 12% of the 3.6 million individuals in the retired age group received a form of income in 2020. More than 90% of retirees are unable to maintain their standard of living prior to retirement and two-thirds of members have less than R50,000 in their retirement funds.”

Reason Number 2 to invest in employee financial literacy: The cost of living is surging

Consumers are likely to face a triple threat in terms of costs in the coming months with inflation ticking up as a result of the Ukraine / Russia crisis impacting fuel and input costs. Interest rates are also expected to rise across the globe and South Africa will be no exception.

Reason Number 3 to invest in employee financial literacy: Municipal costs are expected to rise sharply

On top of this, there are indications that municipalities are looking to raise tariffs by between 9 and 11. With South Africans already having to bear the brunt of load-shedding and water infrastructure challenges, this is one that is not going to go down well!

Reason Number 4 to invest in employee financial literacy: Improved creativity

When your staff are not struggling with their finances and trying to stretch their salaries while living salary slip to salary slip, they are able to focus on their work and how they can generate a better return for the company.

Reason Number 5 to invest in employee financial literacy: Fraud prevention

Research shows that organisations face an increasing threat from fraud both internally and externally. Internally perpetrated fraud is often drive by employees who are under financial strain and who see an opportunity to tackle this by access to company resources. By equipping your staff with better financial habits, you can potentially reduce this risk to your organisation.

Reason Number 6 to invest in employee financial literacy: Build an investor mindset

By teaching your employees basic financial habits, you can develop an investor mindset instead of an employee mindset. For organisations who are still recovering from the economic slowdown, this could be key in retaining quality talent in your business.

All of these are key reasons to invest in employee financial literacy and give them the tools to prepare for these challenges as they arise.

If you would like to connect with Tamlyn or discuss a financial education / financial wellness offering for your team, then please do not hesitate to contact us.