1 in 3 Canadian workers report they are in serious financial distress and are dissatisfied with their personal finances. A survey by the Canadian Payroll Association says nearly 60 per cent of Canadians are living paycheque to paycheque and they would be in trouble if one paycheque were to come one week later.

“We were shocked by that number. So many Canadians are now living so close to the line that, if they miss a single paycheque, a majority will find themselves in financial difficulty,” said Janice MacLellan, chair of the Canadian Payroll Association.

This issue of personal debt and poor finance is present in all socioeconomic circles. It does not matter if your employees make $150,000 or $35,000 per year. Personal financial distress affects millions of Canadian workers and it is costing employers thousands of dollars each year. Researchers have found that financial distress spills over into the workplace, contributing to such work-related occurrences as personal finance-work conflict, lower commitment to the organization, less satisfaction with pay, work time wasted dealing with personal finances, more absenteeism, and poorer health. Employees with money problems are like sharks swimming around the work place taking bites out of the bottom line.

Financially unhealthy employees do not make the best decisions for themselves or their employers. They do not manage their personal finances very well. They do not save and invest enough for a financially successful retirement. These things contribute to lower productivity as well as higher health care costs. Work Place Research shows that your employees are worried about their money more than any other aspect of their life, more then their work, family, marriage, or even friendships.

Employers often recognize the issue but do nothing about it. The new trend at many companies is to provide Financial Literacy seminars at the work place. Financial Literacy is not another trendy catch phrase. It is a movement that is supported by all sectors of society and it is based on the belief that people can’t do better if they don’t know better. The definition of financial literacy is “The ability to understand financial choices, plan for the future, spend wisely, and manage the challenges that come with life events such as job loss, saving for retirement, or child education.” Large numbers of employees are not maximizing their retirement plans and do not have any kind of savings for emergency.

Providing employees with the tools to become financially literate about the basics—knowing how to manage personal savings, credit, and create a spending plan—helps improve factors that affect the organization’s bottom line, such as productivity.

The best way to help your employees financially is not to give them a raise. Instead provide them with workplace financial education.

Quality Financial programs rescue employees and employers. It is in the employer’s best interest to provide employees easy access to quality financial programs. It also is the right thing to do as stewards of the employee’s well-being. Employers do not realize they can improve profits –and prove it– by helping employees improve personal financial behaviors. Quality Workplace Financial Programs Reduce Employee Financial Illiteracy and can save employer’s $750 – $2,000 per employee. The Personal Finance Employee Education Foundation expects employers to receive a ROI of 3:1 (or more) annually for quality workplace financial programs. Example: Cost of Financial Literacy Program $500 per employee. The employer’s benefit will be $1,500 per employee.

Benchmark employee’s financial wellbeing by asking them to respond to the Personal Financial Wellness Analysis (PFWA). The PFWA consists of a 9-item pencil-and-paper questionnaire that in 3-4 minutes measures financial health. The PFWA is a valid, reliable, peer-reviewed, and published measure over 25 years in development. It’s not an issue of money spent on workplace financial education it’s an issue of it’s effectiveness!

Daniel Hanzelka
Special Report for HR-on-Demand

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