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Teaching your team financial literacy - Part 1

When issues arise with employees, there is often more to the story than meets the eye. Poor performance, absenteeism, low morale and low productivity are symptoms of a much bigger problem — money.

Not surprisingly, money continues to be the number one cause of stress for people around the world. This stress can affect not only mental and physical health but also work performance. The typical worker will make many financial decisions during their working life — buying a home, having a family, or saving for retirement.

Many of these decisions are made without an understanding of how to correctly manage these decisions. Offering financial education in the workplace ensures that employees have access to information when it is relevant to them. And by improving their knowledge, skills and confidence around money, employees will be better able to manage debt, save for emergencies and plan for their retirement.

Employers also benefit. Research shows that financial literacy in the workplace can lead to improved productivity, including:

  • Increased employee retention, morale, productivity and profits

  • Better health

  • Lower absenteeism and health care costs

In this financial literacy series, we start by going over the basics. Explain the difference between income and expenses Make a spreadsheet or write a sample monthly budget with a pen and paper. List total income, and break expenses up into categories, such as car payments, insurance, a cell phone bill, and entertainment. Mention that income and expenses can fluctuate month to month, so tracking them over time is essential. Make a ‘real-life’ sample budget Include your team's actual income and spending from last month. Explain to them that income includes things like:

  • gift-money

  • salaries from part-time jobs

  • money from selling items (for example, cars, phones, or clothes)

Then, give them some examples of monthly expenses:

  • cell phone bills

  • streaming services (for example, Netflix or Hulu)

  • haircuts

  • money spent going out with friends

Cover these basic examples first, then introduce a more complex sample budget that includes rent, utilities, and groceries. Explain the difference between a need and a want Housing, utilities, and other core bills are spending priorities. If money is tight, paying rent or car insurance is more important than going out to eat or buying a new cell phone. Ask your team to subtract their expenses from their income, and discuss how balancing needs and wants can impact their budget. Ask them to identify needs that take priority and any desires that aren't necessary to save money. Show them how to make bill payments The most common method of making payments is via a debit transaction. Show your team an online bill payment portal like CUC's PowerPay, or an online banking platform like Butterfield Online. Explain how to fill in debit card billing information, create security passwords, and manage beneficiaries and payees.

Cheques are becoming less frequently used methods of payment, but if you wish, you may show your team a physical cheque and explain how to fill in the date, payee, payment amount, and signature fields. Introduce the importance of saving money While saving money is a separate lesson on its own, you'll need to mention it when you explain budgeting. Let your team know that keeping 10 to 20 per cent of their income is crucial for unexpected bills, a down payment on a home, and retirement. If there are any avid readers on your team, you may wish to purchase a copy of The Richest Man in Babylon for them. After being in print for nearly a decade, it is regarded as a classic of personal financial advice. Use budgeting resources to simulate real-world scenarios After covering the basics, have your team create and manage hypothetical budgets using smartphone apps. Personal finance simulators can provide accessible, concrete examples and reinforce budget management skills.

For example, use the Mint app, which is free for iOS and Android devices. This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date indicated and may change as subsequent conditions vary. The information and opinions contained in this post are derived from proprietary and nonproprietary sources and are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Chamber Pension Plan, its officers, employees or agents. This post may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any of these views will come to pass. Reliance upon information in this post is at the sole discretion of the reader.

The strategies discussed are strictly for illustrative and educational purposes and are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. There is no guarantee that any strategies discussed will be effective. The information presented does not take into consideration commissions, tax implications, or other transactions costs, which may significantly affect the economic consequences of a given strategy or investment decision.

This post contains general information only and does not take into account an individual’s financial circumstances. This information should not be relied upon as a primary basis for an investment decision. Rather, an assessment should be made as to whether the information is appropriate in individual circumstances and consideration should be given to talking to a financial advisor before making an investment decision.


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