The COVID-19 pandemic has put people’s financial plans in disarray. With uncertainty looming large, they are anxious about their financial future. Majority of the workforce in India is relatively young. They have less life experience and low levels of financial literacy. Even the older workforce, such as Generation X cohorts, are heavily reliant on fixed return instruments such as Fixed Deposits and Savings accounts, which do guarantee returns, but are not enough to beat inflation.
A recent survey conducted by Scripbox, a digital wealth management service, depicted that amid COVID-19, Indians have been most stressed about their physical health (54 percent), followed by financial health (46 percent), ahead of family (28 percent) and relationships (23 percent). Out of the 630+ men and women surveyed, millennials (those under 35 years of age) are far more likely to let their savings lie idle in their bank accounts than those over 35 years, who would rather invest it than let money lie idle, indicating maturity of understanding of financial planning.
Today, businesses have the opportunity to help their employees manage their money better, by empowering them with financial reskilling.
Why employers should offer financial reskilling programmes
Any stress in the personal lives of employees can immediately reflect their well-being, whether in their personal lives or at work. If they are dealing with stress due to financial issues caused by the pandemic, they may not be able to concentrate on work. A financial reskilling or literacy programme can give them the control they need over their finances, in effect reducing strain, enabling them to deliver their best at work and substantially increasing productivity.
A financially sorted employee may also not be tempted to change jobs frequently. Losing an employee who has been trained and has years of experience managing a key position is damaging to any business. By helping them become financially smarter and maximise their earnings, businesses can retain the best of talent.
Moreover, such an initiative can help employees with their mental health – one of the biggest necessities in today’s unpredictable times. It will empower them to make the right financial decisions for their future. It will provide them with the tools required to plan various life goals such as buying a car, a house, saving for their children’s education, planning vacations, as well as creating a fund for their sunset years. This will inadvertently create an overall sense of well-being and aid in their growth – personally and professionally.
How a financial reskilling programme can help
Financial management may come easy to a few; however, for others, it is a Herculean task. How to budget, save and invest are questions that are met with a lot of confusion. A financial reskilling programme can give employees the direction they need to reach financial freedom.
- Effective budgeting: Financial reskilling can train employees to better understand their spending patterns, budget their monthly expenditure, pay bills on time, cut out unnecessary spending and save systematically.
- Managing debt: This is critical for gaining financial independence. Financial reskilling can teach employees about prioritising the repayment of debts. This could be a home loan, personal loan or even mounting credit card bills. It can help them create a thorough repayment plan and become debt-free as soon as possible.
- Using credit wisely: A good credit score is imperative. There is really no way around it. Financial reskilling can teach employees the importance of building and maintaining a good credit score by using credit cards wisely, paying off full amounts due before the due date, and so on.
- Understanding basics of investment: This initiative can guide them on basics such as how to invest, where to invest, how to assess risk, and more. It can also offer personalised recommendations based on the risk appetite of each employee so they are aligned to their financial goals.
- Planning for life goals: A financial reskilling programme can direct them on the right path to meet the aforementioned life goals. It can introduce them to key tools such as mutual funds, SIPs, government schemes, gold bonds, and more for their wealth management needs.
- Long-term thinking and planning: Often people do not understand the power of compounding and the discipline of accumulation. This can help people consider the long-term and plan for it, so they are secure and confident about their financial futures. It will also help employees look beyond compensation for their career goals.
- Tax planning: Taxation is a topic that baffles many. With a reskilling programme, they can learn the basics of our taxation system, and understand how to invest in tax-saving products such as mutual funds, and maximise their savings.
How to get started
For any financial literacy plan to be successful, it needs to be robust and have long-term vision. Businesses can bring in financial advisors who can conduct online workshops on various financial topics throughout the year. Offline advice via emails and calls can be made available so employees can ask specific queries. An HR initiative wherein businesses develop in-house multi-level financial modules on their private network can be key to ensuring the programme is effective, and more importantly, useful for the employees.
A financial reskilling programme is a must-have in today’s context. Not only can it empower employees to be financially successful, it can also bring tremendous goodwill for businesses.