Having a predominantly young and working population that can contribute to the economy and script the country’s progress signals towards a promising future. But do a quick survey on your floor, and you will realize that just about everyone, young and old, is worried about money - from taxes to emergencies to retirement. It is common knowledge that most Indians are vastly underprepared when it comes to securing the present and future finances.
Whether it is the 440 million millennials (who also form 46 percent of the workforce) or senior executives who have spent at least 10-15 years working, Indian working professionals advice and guidance on how to plan their finances for various life stages. While most employees will admit that they are earning as much as they would like, many do not even realize that they are unaware of how to put their savings and surplus income to best use or how to save for retirement.
There is no doubt that the financial wellness of an employee plays a key role in their happiness, satisfaction, and performance at work. Employees who are facing financial concerns at home are less likely to be engaged and motivated and more likely to change jobs more frequently to get the best compensation possible. Lack of funds, low income, or pressing financial responsibilities trigger stress, anxiety and even depression, and the fact that employees are ill-equipped to make the best use of their remuneration only adds to the woes. The onus of inculcating employee financial wellness then must be borne by the employer, even if in part.
How can we make the future of India financially-able?
Make it a part of employee wellness
To begin with, employers need to understand just how critical financial planning is for the overall workplace wellness and happiness. Unfortunately, money is not something we discuss at home openly or learn about in school or colleges and even in B-schools. Thus, when we have enough money (or the lack of it), we don’t know what to do in that situation (apart from spending it, obviously). Just the way physical and mental wellness initiatives are playing critical roles in ensuring employees are happy not only at work but outside of work too, financial wellness programs can also be made an indispensable part of employee wellness. Here’s how:
- Organizations can tie-up with financial services firms that can hand hold employees in educating and helping them understand their income and financial aspirations, and help create a viable long-term financial plan.
- These programs must take into cognizance that senior executives, middle management, and young professionals are at different life stages, income levels, and therefore, have different needs and challenges
- Aside from periodic interventions, helping employees plan for and save income tax can be an important event every year. Here too, hand holding every step of the way, empowering employees with knowledge and actionable advice is vital.
Make it a part of employee onboarding: Along with an onboarding session on the values of the organization and how new employees should get accustomed to their role, employers can also educate employees on the importance of saving regularly and plan for the future. Other critical financial know-hows include having an emergency fund, saving taxes, and retirement planning - all of which are critical for any individual. Forming habits such as saving, investing money, planning for expenses ahead instead of taking loans, and how to prevent falling into a debt trap are important money lessons that employers can make a part of financial wellness programs.
The majority of professionals are not only ill-equipped to make sound financial decisions today, but also lack understanding when it comes to their retirement. For many individuals, home loans, children’s education, and other aspirations take the front seat; ahead of retirement planning, an inevitable stage of life. Employers can play a key role in helping their employees understand planning for various life goals and investing in them systematically through financial wellness programs.
Being financially aware is no longer a luxury, but essential for people to live a happy and productive life. Every Indian should have “the ability to use knowledge and skills to manage one's financial resources effectively for lifetime financial security (Financial Planning defined by Hastings et al. 2012). This is only possible when people are introduced to concepts of savings, debt, taxation, not to mention the fundamentals of banking, insurance, debt management, etc at a young age. Since there are no formal structures in our education system (unless you are a student of finance), the workplace can become an ideal place for people to learn financial knowledge.