Article How to improve financial literacy among your employees

Essential skills like budgeting and managing debt could help employees to be more in control of their money and empower them to make better financial decisions. However, almost 1 in 2 adults don’t feel confident about managing their money day-to-day – and 36% feel that thinking about their financial situation makes them feel worried.¹   

As an employer, there are actions you can take to help employees improve their financial knowledge and skills. Find out why financial literacy matters in the workplace and four actionable tips to consider.

Why is financial literacy important in the workplace?

Money concerns can have a direct impact on financial wellbeing and can be a distraction at work. In the Centre for Economics and Business Research 2021 report, it mentions that 18% of workers noticed a decline in their productivity at work due to financial worries in the past two years.²

Concerns about money may also affect employees’ mental and physical health, forcing them to take time off work. An estimated 13 million working days were lost due to financial distress in 2021, costing UK employers up to £2.5 billion a year.² 

While plenty of employers have a financial wellbeing policy in place, relatively few are actively focusing on it as part of their HR strategy. Understanding the financial needs of your employees could help attract and retain the best talent, improve levels of financial wellbeing and reduce the costs of absenteeism in your business.

How to improve financial literacy in the workplace

Here are some strategies you could explore to empower your employees to be more confident when managing their money.

1. Develop a financial literacy programme

Educate your employees on key financial topics like workplace pensions, earnings, and savings. For example, help them better understand the components of their payslip, discuss methods for budgeting or how different tax and saving allowances work.

It’s important to use simple, clear language and aim for bitesized, regular communications that employees can more easily digest. We all learn in different ways, so consider the style of support you provide. Would live webinars and face-to-face workshops be of most benefit – or would written content and videos that can be reviewed in their own time be preferred?

If possible, make the most of any in-house experts across your business, as well as external guides and resources for your programme. For example, your pension provider will likely have a range of materials around educating and engaging employees with their savings.

Be careful not to offer specific advice about important financial decisions such as investing unless you’re qualified to do so. The aim is to educate employees so they’re better equipped to make their own decisions. If they need it, you can point them to other guidance and advice, which we’ll cover further in this article.

2. Tailor support for different groups

Money worries don’t affect everyone equally. For example, female employees are more likely to suffer from financial stress and typically have less saved in their pensions.³ Across all working-age adults, women on average have annual pension contributions of £2,600, compared with £3,400 for men, due to differences in earnings.⁴

Age plays a part too. Employees aged between 25-34 are more likely to experience financial pressures compared with their older counterparts.³ However, older employees might be less comfortable with evolving technology such as online banking – which could make it more challenging for them to manage their money.

As such, personalising your support for different demographics, life stages and other nuances may prove more effective and drive engagement with the topics you cover.

3. Make guidance and advice accessible  

Your employees might need further support beyond an in-house literacy programme – but the cost of expert financial guidance or advice may be a barrier for them. If you’re able, providing these services for free or at a subsidised rate could encourage employees to go beyond a basic understanding and actively engage with their finances. For workplace pensions, your employees may already have access to free or discounted advice through your workplace scheme provider.

If subsidising advice isn’t an option for you, clear signposting of free guidance and resources can be just as important for employees to further their financial learning. Many employers admit their employees aren’t fully aware of the benefits they offer or don’t fully understand them. So make sure any relevant internal or external links and materials are widely known and easily found. This will allow your employees to improve their financial literacy at their own pace, and in their own time. 

There are lots of materials to direct employees to, such as:

• Our Money tips hub available at aegon.co.uk/customer/moneytips which features articles on money matters from managing to debt to understanding pensions and everyday money management.
• Our Financial Wellbeing index which shares our financial wellbeing research, hints and tips for employees to improve their financial wellbeing.
• MoneyHelper – government backed, free, impartial guidance on all kinds of financial matters.

4. Promote open dialogue 

68% of people whose money worries had impacted their mental or physical health hadn’t told their employer.⁵ Of this group, 41% cited negative perceptions such as a lack of trust or fear of discrimination as a reason for keeping quiet.⁵ By normalising conversations about money in the workplace, employees might be more open to speaking up and asking questions. In doing so, you’ll learn more about the issues they’re facing and be better placed to give them support. Get involved in initiatives like Talk Money Week, which encourages people to open up about their finances.

Embrace the benefits of financial knowledge in the workplace

Improving financial literacy in the workplace can have advantages for everyone. By doing so, your employees can develop more confidence and expertise when it comes to their finances. And simultaneously, you can nurture a happier, healthier and more productive working environment.