How to improve financial literacy to enhance your employees’ lives
Around 65 years ago, George Bernard Shaw pointed out: “The single biggest problem with communication is the illusion that it has taken place.”
Yet even today, in the era of information overload, we still don’t get it!
Unfortunately, most of what we experience about information we ‘need to know’ is via print brochures or e-mails. So if you want to access critical information to make life-enhancing decisions, you have to read. Unfortunately, this means that many South Africans are excluded because of their critically low literacy levels.
Low literacy levels impact employee benefits
This is because assumptions are made that staff members understand their benefits, plan accordingly for retirement and make good decisions based on predominantly written communication mediums.
However, as we are seeing in the looming crises around the South African retirement industry, and the climate of financial illiteracy, the choices being made are coming back to haunt us.
An ever-increasing percentage of South Africans currently do not, or will not be able to, retire in any degree of comfort. Where organisations believe that they are communicating and giving information on a regular basis, not everyone understands these messages. This assumption is based on the increasing number of people who are realising that beyond retirement age they will have to continue working.
How can we get beyond this?
To address this daunting state of affairs, we need to ensure that people have access to innovative financial literacy education programmes at worksites and communities.
In addition, it has become increasingly clear that we need to help organisations focus on their:
- Employees;
- Members; and
- Benefit needs
Picture-based learning rather than telling or just teaching, together with a basket of accessible products, can be used to demystify the often seemingly-complex layers around the understanding of:
- Financial decisions;
- Pension decision-making; or
- Medical benefits decision-making.
These types of initiatives can really help people understand banking transactions and costs, debt traps and the debilitating effect of poor decision-making on both the individuals, as well as the companies they work for.
Financial stress impacts the individual, their families, their health and their performance. It slowly but surely cripples the ability to function effectively because the effects become all- consuming.
So staff often migrate to different workplaces because they see the ability to cash in on their pension funds as a way to either help ease the debt burden, or create a short-term change in lifestyle. Either way, the decision is made for the wrong reasons and impacts both them and their employers who keep losing staff, productivity and incur huge retraining costs. Because they simply don’t know better, people make poor decisions.
Better knowledge brings the ability to make better decisions. Better decisions help both individuals and organisations communicate more effectively. Effective communication reduces conflict and misunderstandings because the simple truth is people don’t know what they don’t know but they often act like they do - all too frequently with unforeseen and unhappy consequences.
