Employee Personal Financial Training

2 Apr    Uncategorized
Apr 2

Employee Personal Financial Training

Are you missing out on a free opportunity to learn about personal finance at your place of work? Five short years ago, personal financial management training for employees was not even on the menu of most human resource professionals. Over time however, it has become clear that providing financial management skills to employees is not only beneficial for them, but also for the employer’s bottom line. It is also gradually being recognized that at a time when expensive employee benefits are being cut, financial education is a low cost, high impact benefit.

People spend a huge portion of their lives and resources getting education that will enable them secure employment and become an asset to their employer thereby earn a comfortable living. However, it is ironic that none of that time spent acquiring these productive skills is spent on learning how to manage the earnings generated. The unfortunate result of this oversight is that many people earn a good income yet often find themselves in a financial bind. Over seventy eight percent of the working population is afflicted by one or more of the following; lack of money to take care of financial emergencies, inability to provide a quality education for offspring, inability to provide quality healthcare for the family, heavy and growing debt load, inability to purchase a home and ultimately, abject poverty in retirement.

These are the personal problems employees face every day. Unfortunately, employers cannot afford to remain aloof and detached as employees struggle to solve them because they affect the employer’s bottom line everyday. Finances are a high priority issue in most people’s lives, one which causes more stress, hence low productivity than most others. An employee who is facing an emergency but lacks the money to solve it can hardly be expected to be focused and productive at work. Nor can one who is being hounded by creditors or has been evicted, or one whose child has been sent home from school for lack of school fees. Such employees will spend a lot of their employer’s time, and resources (telephones, vehicles etc) trying to sort out their issues. They will feign illness to get time off from work and even if they do not, many will be there physically but distracted and unproductive.

There is a high correlation between financial distress and family instability and the household problems of unstable families may spill over into the workplace. Many HR professionals find themselves spending time on issues which have to do with employees’ financial and family affairs, time which could have been spent more productively. Most financially illiterate people see only one solution to financial challenges; more money. So employers find themselves inundated with demands for higher pay and salary advances and some employees engage in moonlighting in an attempt to increase their income. A moonlighting employee cannot focus all their attention and energies to the job you have given them. The most dangerous possible effect of craving for more money is criminal behavior. Inside jobs are sited by police authorities in many cases and some employees even go to the extent of using their employer’s facilities to engage in drug smuggling, tainting their employer’s image.

Employers can help their employees improve their financial lives and avoid these problems, and  avoid their negative effect on their bottom line at the same time by tackling the root cause of these maladies; lack of financial literacy. Financial education is a basic life management skill that every employee should be equipped with to help them manage their finances better. A quality financial education program is one which addresses the needs of the various income and educational levels of your people, imparts knowledge that is practical and that can be applied in their situation and in a manner that inspires them to take action. It should teach them how to determine their financial position and trend, and the impact of acquisition of depreciating personal use assets as opposed to appreciating investments.

Without setting personal financial goals, not much is likely to be achieved and participants need to be made aware of common goals and how to use them as a starting point for their own goals. Children’s education funding, home purchase and the importance of preparing for retirement must be emphasized. Cash flow management through budgeting is a key financial skill that must be underscored in addition to other ways of controlling personal expenditure. The dangers that inappropriate debt poses to people’s financial well-being are important to understand as they are often underrated. People are always interested in the basic principles of personal investing and a significant amount of time needs to be allocated for this section.

Another area that should be covered is personal risk management. Many families find themselves in dire financial straits due to lack of attention to insurance needs, and estate planning. Employees also need to be made aware of the value of any employment benefits that they may be getting.

The personal financial training can be structured as a voluntary one-day course and even spouses can be encouraged to attend for maximum impact. One of the most cost effective approaches is to provide online training for employees. As HR professionals though, you need to be careful that what you give your employees is unbiased financial education presented by professionally trained and accredited personal finance consultants rather than expose them to a sales pitch from financial product sellers. No matter what they say, financial product providers’ ultimate agenda is to sell their specific products. These may or may not be appropriate for the individual participants who unfortunately have no way of determining that. A good way to vet financial education providers is to ask for testimonials or speak to HR professionals who have used their services.

Financial education is a powerful benefit that is bound to produce both quantifiable and non-quantifiable benefits for employers their employees. If your employer provides such training, ensure that you take maximum advantage of the opportunity to learn how to manage your finances.

© Manyara Kirago

 

9 Comments

  1. I attended a Personal Financial training that you facilitated at my workplace some 9 years ago and decided to diligently apply what you taught; it made a huge difference in how I now manage my finances. Some of these lessons have since become habits, I cant even list them ..glad to be financially healthy.

    1. Hi, glad to hear you implemented some of the lessons. I would like to hear more! Please let me have your phone number or you can text me on 0729205295. Thanks and have a great day!
      Manyara

  2. A case in point of inside job conspiracies that employers must watch, is the recent hacking of KRA systems.

  3. This is very good information. All Saccos should include financial education in their member training as most of Kenyan population are in Saccos and have never been employed. This will help them question the operations of the social organizations and avoid being conned of their hard earned resources.

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