Helping employees learn about money benefits everyone

By Jane Rooney, Canada’s Financial Literacy Leader

April 4, 2017

As Canada’s Financial Literacy Leader, my goal is to help Canadians acquire the knowledge, skills, and confidence to manage their money and debt wisely, plan and save, and protect themselves from fraud and financial abuse. It’s important that individuals learn to budget, save, and plan for their future through learning about tools, techniques and products available to help them reach their financial goals.

Consider why this matters so much: Canadians are living to an average age of 86. That means people who retire at 65 could be living in retirement for a long time and need to plan and save for this reality.

At the other end, we have Millennials who now make up the largest segment of the workforce. We have a generation of young people entering the workforce when there’s a lot of precarious employment—the so called “gig” economy. Young people may not get one permanent job but instead juggle more than one part time job. They might not have a workplace pension in their lifetime.

Financial literacy has always been important but it’s even more so in this environment.

Benefits of financial literacy in the workplace

One of the best places to introduce financial literacy is in the workplace. Employers are already helping millions of adults understand their company benefit programs, compensation and other benefit and saving vehicles.

Employers can make a big difference. And it helps their business too.

We know that money troubles cause a lot of stress. In fact, a 2014 Financial Planning Standards Council survey found that 42% of Canadians rank money as the source of their greatest stress – higher than work, health or family obligations. Stress, we know, can affect our mental and physical health and wellbeing.

There’s a big incentive for organizations to play a role: A health and wellness study by Manulife found that employees who are financially prepared are 22% more engaged in their workplace, 21% more likely to enjoy their work, and 18% more likely to say they are motivated to do their best at work.

There is evidence that improved financial literacy in the workplace leads to increased employee retention, productivity and profits. It lowers absenteeism and health care costs, and can increase participation in retirement pension plans.

How can employers help?

Financial literacy can be integrated into the workplace with pension and benefit information, delivered through the human resources and employee assistance programs, or offered as training. When considering developing workplace financial literacy plans, employers can leverage existing educational programs, often free of charge, available through professional associations or non-profit organizations. The Chartered Professional Accountants Canada, for example, offers financial literacy workshops.

Employers can also use the Financial Consumer Agency of Canada’s (FCAC) online programs, tools and resources, and encourage their employees to do the same. FCAC’s Canadian Financial Literacy Database is a one-stop place where employees can find tools to learn how to manage debt, whether they’re thinking about buying a new home or getting ready for retirement, for example.

And here’s one simple thing all employers can do: encourage employees to make a budget.

We know from our research that less than half of Canadians (46%) have a household budget. Yet 93% of people who do have a budget stick to it most of the time.

Companies can offer their staff a budget worksheet or point them to FCAC’s Budget Calculator to help them budget. If all companies did this one thing, we could help many Canadians get on the right track.

Why a budget? It’s a simple but highly effective tool; it is the foundation. Creating a budget can help you identify your income and your expenses and allows you to see where you can adjust spending. This can help you start to save and pay down debt, and increases your confidence when making financial decisions.

There’s a wealth of information to help employees. To find out more, go to Canada.ca/It-Pays-to-Know.

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