How Not To Lose Money by Investing Right? Secret Revealed by Top Investors

How Not To Lose Money by Investing Right? Secret Revealed by Top Investors

Investment = wealth creation or at least what you want to believe. However, whether it is due to mistakes, ignorance or a lack of financial literacy, your investments might not give you the desired results and might also result in a loss.
What can you do to avoid losing money through your investments?

Investing is an art and unless you learn to master the art properly, your investments might leak money rather than accumulating it into a corpus that you need.

 

So, here are 9 tips on how not to lose money by investing right –

 

 

1) First, Identify Your Goals, Always!

What is the basis of your investment? Creation of funds for your financial goals, isn’t it? So, start at your goals first. It is useless planning a journey anyways without having a destination in mind.

So, jot down your financial goals, both short-term and long-term. This listing would give you two distinct benefits – it would help you find out the corpus needed for each goal as well as the time horizon.

These two inputs form the basis of your financial plan and so, knowing your goals is the groundwork that you need to do before you jump on the investment bandwagon.

Plan your Financial goals for 2021 with Koppr’s Free Financial Planning Tool

 

 

2) Risk Profiling

The next thing to find out is your risk appetite. Risk appetite means your capacity of taking risks. Depending on your risk appetite the investment avenues would be selected.

If you don’t mind taking risks, you can invest in equity-oriented avenues and if you are risk-averse, fixed income avenues would be better.

Risk profiling should assess your tendency to bear risk vis-à-vis your age. Nobody like losing money and so, risky avenues are always seen with a bit of hesitation.

However, if given time, risks tend to smoothen out and you can get very good returns from risky investment avenues, i.e. equity. So, even if you are risk-averse, you can invest in equity provided – age is on your side and you have a long term investment horizon.

When you are young, you can give your investments time, time which minimizes the inherent risk. So, equity is suitable for long term goals. Do not lose your money by investing in the promise of equity for a quick buck.

Equity is highly volatile and while it can give quick gains, it can result in capital erosion too.

 

3) Tax Planning

Many of you also lose out on your returns because you don’t plan your taxes properly. Remember every investment avenue has its own tax implication.

If you understand such implication and then plan your investments around them, you would be able to save tax and generate good post-tax returns.

So, tax planning is essential, both when investing as well as on redemption. Find out which avenues help you save tax on investment so that you can reduce your taxable income while saving (Section 80C should be understood properly).

Then, when you redeem, check how your gains would be taxed and if you could do anything to avoid or reduce the possible taxation. A very common example is redeeming equity mutual funds.

If you redeem your investments within a year, a short term capital gains tax of 15% would apply on the returns that you have earned. On the other hand, if you redeem them after a year, you would be able to save tax if your returns are within Rs.1 lakh.

Even if your returns are greater than Rs.1 lakh, only the excess return would be taxed, and that too at 10%. So, if you are redeeming your mutual fund investments, check for the tax implication to see if you can save tax.

Losing money is not only through negative returns but also by not planning your taxes efficiently and letting them eat into your returns.

 

4) Know When to Hold and When to Redeem

This is a very technical aspect, especially when investing in equity stocks or equity mutual funds. Balancing between holding and redeeming is a fine line, one that you should toe with careful consideration.

If you hold your investments and the market falls further, you would lose money. On the other hand, if you redeem or switch and then the market rises, you would lose again as you could have earned better profits.

So, this is a tightrope and many investors fall flat while trying to walk it.

Wondering what you should do? Well, the answer lies in the first two points discussed earlier – goals and risk appetite.

If the market is falling and your goals are long term in nature, you can hold onto your investments as the market would correct itself, no matter its bearish run. In fact, the Sensex has emerged stronger after every crash. Have a look –

returns from stock market investment

 

(Source: https://artofinvestinginstockmarket.com/how-to-invest-without-losing-money/)
If you are on the initial curve of the fall, you can also book your profits and switch to debt mutual funds to protect against the volatility.

If you have a low-risk appetite, then also you should book your returns and switch to debt to prevent losing money.

 

5) Invest When the Market is Down

When the market is in a bear run and falling, it is a good time to invest as the stocks would be undervalued. Thereafter, when the market would rise, your investments would give you attractive returns.

So, a falling market is not necessarily a sign of losses. If you look on the brighter side, you can actually make profits by investing in undervalued stocks at that time.

That being said, try and buy good companies at a cheaper value and not bad stocks. Good companies would give good returns but bad ones would never do, even when the market is bullish.

So, try and choose the best-rated stocks with a high Price/Earnings (P/E) ratio as these companies would deliver good profits.

Here’s a free certification course on stock market 

 

6) Create a Diversified Financial Portfolio

Which is your favourite investment avenue? If only one or two names spring to your mind, it is a cause of concern. Can you live on one food for your entire life? Variety is the needed spice, isn’t it, both from the taste and nutrition point of view?

So why play favourites with investments?

Your portfolio should be a mix of different investment avenues with different asset classes.

You need a mix of –

– Equity and debt investments
– Long term and short term products
– Fixed and liquid avenues

So while mutual funds are good, a little bit of fixed deposit should also be a part of your portfolio. Similarly, if gold is your preferred avenue, invest in equity too for liquidity and better returns.

Here’s a complete guide on how to invest in Gold

A skewed portfolio, with a majority of one or two investment avenues, is a recipe for disaster. If any one of the avenues does not perform well, your entire investments would be in jeopardy.

For example, if you have a heavy proportion of real estate investments, where would you get money for emergency needs?

Too much exposure to equity is fatal in a market crash and too much investment in fixed income avenues is suicidal from an inflation point of view.

What you need is a balance of flavours, a balance of nutrition and a balance of investment avenues. Create a balanced and diversified portfolio and losing money on investments would be a thing of the past.

 

7) Factor in Inflation

Remember that inflation always eats into the purchasing power of money. Moreover, inflation is a reality and if the economy is growing, there would always be inflation.

So, when you invest, factor in this inflation. Invest in avenues that give you inflation-adjusted returns, i.e. returns that have a positive value even after factoring in inflation.

If you invest in avenues where the returns are not inflation adjusted, you would ultimately lose money even though the avenues give returns because such returns would have a low real worth. For example, say a fixed deposit scheme gives you a return of 6% per annum.

If the inflation in the country is 6.5% per annum, the return that you get from your fixed deposits is actually negative.

Let’s see it in monetary perspective.

Rs.100 would fetch you a return of Rs.6 in a fixed deposit scheme. You plan on buying an item costing Rs.6 with the return that you get. Now, after a year, inflation has driven the cost of the item to Rs.7 but you get a return of Rs.6 from the deposit scheme. Is the return worth it especially since you can no longer afford to buy the article that you wanted?

Inflation, therefore, puts a leak into your returns, a leak that can be plugged by choosing inflation-adjusted investment avenues.

 

8) Review Your Financial Portfolio, Regularly

Another mistake that most investors make is that they invest and forget. This is another reason why they end up losing money on their returns. How many times do you opt for rollover of your fixed deposits on maturity?

Your financial needs keep changing with changing lifestyle. Your financial portfolio, therefore, needs to change to keep pace with your changing needs.

Change is the only constant and if your portfolio is stagnant you would lose out on the opportunities of maximizing your returns. So, make it a point to review your portfolio periodically, at least once every 6 months or a year.

This reviewing helps you make the necessary changes to your investments. You can redeem your investments if the time is right, you can make additional investments into a fund that is performing exceptionally well, or, you can switch around your portfolio to change the investment combinations.

Review and shuffle your portfolio to reflect whatever you think is the need of the hour to keep your investments relevant and to maximize returns.

Take this financial resolution to have a financial healthy year

 

9) Learn, Learn, Learn

Do you know why investors lose money even when they try and pick the best investment avenues? Lack of financial knowledge, that’s why and in India, financial literacy is depressingly low.

As per a Standard & Poor survey conducted in the year 2014, more than 76% of Indian adults did not understand the basics of financial planning. Have a look at the numbers of the survey –

financial literacy gaps

 

 

 

 

 

 

 

 

 

 

 

(Source: https://www.aegonlife.com/insurance-investment-knowledge/financial-literacy-india-poor-heres-data-says/)
Lack of financial awareness is the reason why investors cannot plan their financial right. They have limited knowledge of risk diversification, inflation, interest-earning, etc.

As such, they fail to choose the right avenues that would help them get the best returns on their money. The result – they lose out on returns. Financial literacy is, therefore, the foundation for building an effective financial portfolio. It is the bedrock of your finances and if you get the knowledge part right, you can avoid losing money on investments.

Here are few courses on Koppr Academy that will help you to get the right knowledge in Finance

If financial literacy is not your strong suit, you can take the help of online courses designed to impart the necessary wisdom. We have curated some of the most comprehensive financial courses on different financial instruments and financial planning as a whole. You can take the help of our courses and learn the ABC of finance.

Acknowledging is winning half the battle in investing right. Armed with sufficient financial knowledge, if you avoid the earlier discussed pitfalls, you can create a leak-proof financial portfolio which prevents loss of money either because of losses, tax cuts or improper financial planning.

So, start your financial journey on a strong footing. Learn the basics first – our courses are there to help you. Then start your investment journey. Plan your goals, understand your risk appetite, plan your taxes, invest right, redeem right, have a diversified portfolio and do a periodic review.

Plug your portfolio leaks and avoid making losses by investing right.

 

Take care of your Finances with Koppr!

Finance New Year’s Resolutions to Set Now & Achieve in 2021 for a Financial Healthy Year

Finance New Year’s Resolutions to Set Now & Achieve in 2021 for a Financial Healthy Year

The year 2021 marks the start of a new decade. Moreover, with the COVID vaccine almost on the verge of being launched, the year is also filled with hope and new beginnings. In keeping with the tradition of every New Year, you make various resolutions. But how many do you stick to? As January progresses to February and then February moves to March, most of the resolutions are done away with. How about doing something different for a change? If the year 2020 and the COVID pandemic have taught us something, it is the importance of being financially prepared. The pandemic took everyone’s finances by surprise and if you want to avoid a possible reprise, how about taking some financial resolutions for the year ahead so that you can be financially healthy? 

Here are some of the best financial resolutions that you can set for 2021 to sort out your finances –

1) Investing in Health Insurance, Adequately!

Even though the COVID vaccine is almost ready, the time by which you and your family get the shot is still uncertain. It might be one or two years before the vaccine effectively reaches everyone and till then, the threat of the infection is considerable.

If you face complications and are hospitalised, which is not uncommon, the treatment costs might tax your savings considerably. While many States have specified a cap on COVID treatment costs are private facilities, the figures are still grim. Have a look –

Get a Health Insurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Source: https://timesofindia.indiatimes.com/india/hospital-cost-capped-but-covid-can-cripple-80-of-families/articleshow/78610372.cms).
To top it off, if multiple family members need hospitalisation, the costs would only multiply. To meet these costs head-on, invest in a health insurance policy with an adequate sum insured.

You can opt for COVID specific health plans which have been launched – Corona Kavach and Corona Rakshak, especially for protection against COVID related medical costs. For other illnesses and injuries, invest in a comprehensive health insurance plan for your family.

Opt for a high sum insured because the medical costs are increasing steadily. If affordability plays a spoil-sport, opt for top-up or super top-up plans to supplement your coverage but do take up the resolution of having an adequate cover, at all costs.

Pro tip: Don’t get complacent if you have an employer-sponsored group health plan. While the policy would cover hospitalisation expenses, it would be insufficient in covering high treatment costs.

Even if your employer offers a group health scheme, consider it to be a bonus and invest in an independent health plan for customized and sufficient coverage.

Read more about how to plan insurance for you and your family here

 

2) A Term Insurance Plan is Necessary Too!

While health insurance takes care of your medical expenses, what about the risk of premature death? Whether it is due to COVID or other illnesses or even accidents, you are constantly exposed to the risk of a premature demise. While you cannot eliminate the risk, you can definitely insure it.

Term insurance plans help you cover your life risk at affordable premiums. You should opt for a high sum assured so that your family receives adequate financial assistance to fulfil the financial responsibilities if you are not around.

So, after you are done with health insurance, resolve to buy a term insurance plan for complete financial security.

Pro tip: Compare the available plans and then invest in one which offers a comprehensive scope of coverage at affordable premiums. For the right sum assured, there are online Human Life Value (HLV) calculators which you can use.

 

3) Creation of an Emergency Fund

The past year taught us one thing – anything can happen anytime. People in established jobs can lose their positions, availability of liquid funds can become an issue, a profitable business might completely shut down and whatnot.

To be financially prepared against such contingencies, an emergency fund is needed. You should set aside at least 6 months’ worth of your income in a liquid fund which can be accessed whenever an emergency strikes.

If you have an emergency fund, review its adequacy. If you haven’t created one, do so in the coming year so that any financial contingency would not threaten your best laid financial plans.

Pro tip: If you are unable to set aside a lump sum amount into an emergency fund at once, start small. Spare what you can and then build up the fund slowly but steadily.

 

4) Paying off Debts, Without Default!

Loans have become a common part of modern man’s lifestyle, both in the rural and the urban segment.

According to the Household Survey on India’s Citizen Environment & Consumer Economy, also called the ICE 360° survey, which was conducted in 2016, 27% of the surveyed households had at least one outstanding loan.

While 30% of rural households were found to be indebted, the percentage was 21% for urban households. Have a look –

paying debts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Source: https://www.livemint.com/Home-Page/KE02Tqr0Y5Tc5wPe7m6f1N/India-and-its-burden-of-social-obligations.html)
Moreover, by March 2020, Indian households accounted for Rs.43.5 trillion in debt thereby causing retail loans to account for 21.3% of the total GDP. (Source: https://www.business-standard.com/article/economy-policy/household-debt-touches-record-high-at-rs-43-5-trn-amid-covid-19-crisis-120041701789_1.html)

While loans provide easy funds for your financial obligations, repaying them on time is of the essence. Defaulting on loans not only causes heavy interest outgoes, but it also hampers your credit score.

Ultimately, with mounting default, you enter into a debt trap, coming out of which takes years. So, pledge to pay off your debts timely in the coming year so that you can avoid the possibility of a debt trap.

Pro tip: Pay off your credit card debt and personal loans first because they have high-interest rates and affect your credit score considerably. Home loans, on the other hand, can be continued because they give tax benefits but make sure to pay the EMIs on time.

Plan your financial goals for 2021 with our free financial planning tool

Do you want to achieve your Financial Goals

 

5) Reviewing Your Portfolio Periodically

2020 was not so great when it came to your investments. Market-linked investments were in the red when the financial year started. However, since then, the equity market has recovered and now, the Sensex is trading at pre-COVID levels. Have a look –

review your investments periodically

(Source: https://timesofindia.indiatimes.com/business/india-business/sensex-atop-mt-40k-after-7-mths/articleshow/78563050.cms)

As the Sensex has rebounded, your investments might have recovered too but there is an important lesson to learn from this crash.

The market is dynamic and so are your financial needs. So, it is important to review your portfolio regularly in tune with the changing market dynamics and your financial needs. Try and churn your investments to minimize risks and maximize gains.

For example, as the COVID impact was increasing in March, if you would have shifted to debt, you would have been able to book your equity profits and protect them against market volatility.

Similarly, now, as the markets are rising, it is sensible to shift to equity to gain on the bullish market. Having a stagnated portfolio is bad as it prevents you from getting the maximum returns and also exposes your investments to unnecessary risks.

Pro tip: Invest in mutual funds to get the benefit of diversification rather than picking specific stocks. You can choose different mutual fund schemes as per your risk appetite and investment horizon.

 

6) Picking Your Investments as Per Your Need and Risk Appetite

Planning a financial portfolio is no joke. You need to pick investment avenues depending on your financial goals, investment horizon, disposable income and, most importantly, risk profile.

Creating a haphazard portfolio by mimicking what others have invested in would not meet your financial needs sufficiently.

Your portfolio should be unique to your needs and requirements. So, first and foremost, assess your risk appetite. Usually, if you are young, i.e. in your 30s or 40s, you can afford to take risks since you have long investment tenure in front of you.

At this age, equity-oriented savings avenues would be the best as they would help you maximize your wealth.

In your older years, however, your equity exposure should reduce as you are nearing retirement and you need to protect your capital. So, understand your life stage and risk profile and then select investment avenues.

Moreover, whatever risk profile that you belong to, have a well-diversified portfolio. Keeping all your eggs in one basket is not wise. Variety is the essence of life and of investments too.

So, if you are risk-loving, allocate a part of your savings in debt to create a stable portfolio sturdy enough to weather out market volatilities. On the other hand, if you are risk-averse, invest a part of your savings in equity-oriented avenues too which would help you earn attractive returns and create a considerable corpus for your financial goals.

Just like a balanced diet is necessary to remain healthy, a diversified portfolio is needed to remain financially healthy.

Pro tip: When you start financial planning, first assess your disposable income and risk appetite. Then list the investment instruments available and classify them as risky or non-risky.

When investing in debt, choose debt mutual funds or other market-linked debt instruments to earn inflation-adjusted returns from your investments.

Tax planning is also necessary when creating a financial portfolio to ensure that you can minimize your tax liability and maximize your investments.

 

7) Budgeting

How many times do you find your income being spent before the end of the month arrives and you scraping by just till the month ends?
If your answer is ‘Often’, something is wrong with your financial planning and this something is ‘Budgeting’.

Budgeting is the first step in determining your disposable income and the amount that you can invest. If you skip this, overspending, being in debt and not having enough would always be a reality.

If you want to get your finances in order in the New Year, start by budgeting. Create a monthly budget listing all the sources of income on one side and the possible expenses in the other.

Besides the essential lifestyle expenses, make room for personal expenses as well but be a bit stingy in this aspect, especially if your income has shrunk due to the pandemic. Budgeting helps you figure out your incomes and expenses and also plugs unknown leaks. Moreover, when you have a budget, you are less likely to splurge or overspend.

If you haven’t learned the importance of budgeting as yet, it is time you do. Weed out unnecessary expenses and follow a strict budget if you want to save a decent amount of money for investments.

Rather than using up your income on expenses, try and create investments first and then allocate your income towards expenses, especially personal ones.

Pro tip: Budgeting is a pen and paper job or a computer screen and keyboard one. Don’t plan your budget over the top of your head. It would not prove fruitful.

Instead, take out some time and plan as detailed budget as possible at the start of the month. And of course, stick to the budget, only creating it is useless.

Watch a video on how to plan your monthly budget effectively with a FREE budgeting sheet!

 

8) Make a Resolution to Follow Through with Your Resolutions

What’s the point in making the above-mentioned resolutions if you don’t carry through with them? So, after you are done making the above-mentioned resolutions, take one more step and make a resolution to stick with them.

Backing out of your diet-related resolutions or habit-related resolution might not have as far-reaching implications as backing out of your financial resolutions will. Financial health is the most important one and if you are financially secured, you can face life’s challenges head-on.

So, ensure that you follow through with your financial resolutions for your financial well-being.

Pro tip: Write out your resolutions and stick them somewhere where you are bound to glance at them every day. This would give you the necessary discipline to soldier on with the resolution for finance that you have made.

The year 2021 is round the corner and only you have the power to start the year on a positive note. Don’t blame the economy, the Government or the markets for your financial problems.

Instead, make these financial resolutions for 2021 and create solutions. None of the resolutions is difficult or impossible to inculcate. It all boils down to your motivation and dedication towards your finances.

Start planning your finance for 2021 with Koppr’s FREE financial planning tool

Do you want to plan your finances for FREE

 

 

 

 

 

So, what would it be? A financially healthy year or a struggling one? Comment Below 👇

Why you need a financial wellness platform?

Why you need a financial wellness platform?

Aristotle wrote, ‘Money is a guarantee that we may have what we want in the future. Though we need nothing at the moment it insures the possibility of satisfying a new desire when it arises’, stressing on the importance of money. Money is an important tool if you want to meet the daily household expenses and also fulfil your family’s needs. Therefore, you spend your life trying to earn enough money to fulfil all your needs. How often are you successful in your endeavour?
Frank A. Clark said, ‘Many folks think they aren’t good at earning money when what they don’t know is how to use it’. He was right in his sentiment. Earning money is not important. What is important is how you use your money to your advantage. Management of your finances determines your financial wellness. Are you financially well or do you struggle with money?

What is financial wellness?

Financial wellness is the measure of your financial health. Being financially well means being in control of your finances and having a sound financial plan at your disposal. This financial plan would not only help you meet your expenses but also come handy in times of emergencies and ensure that your life goals are aptly fulfilled. Many organizations define financial wellness as the process of learning the successful management of financial expenses.

Many of us might consider financial wellness similar to that of financial literacy. However, these two terms are not synonymous and have certain significant differences. Financial literacy is the knowledge about the basic financial concepts and the skills which are necessary for day-to-day life. On the contrary, financial wellness is a state of having a good financial outlook and is a measure of the overall health of an individual’s financial life.

Why is financial wellness important?

Dave Ramsey said, ‘You must gain control over your money or the lack of it will forever control you’. This is the whole essence of financial wellness. It shows why financial wellness is important. If you don’t control your finances and make them work for you, your entire life would be spent in financial worry and you would live under constant financial stress.

It is age-old thinking that if you earn more your financial health is good. But it is not always true. You need to manage your money so that it works to your advantage and improves your financial health. The importance of financial wellness can be understood from the following points –

  • It helps you live a worry-free life.
  • You can bond with your family and fulfil their needs and wants easily
  • You can be more productive at your workplace thereby building a reputation for yourself which helps you get promotions and performance incentives
  • An emergency would not cause you to panic and become desperate. You would be able to calmly handle a financial shock and tide over the rough patch easily.
  • Mental disorders like anxiety, stress, depression, etc. would be at bay
  • Your retirement would give you the time to fulfil your dreams without worrying about your finances
  • You can leave behind a legacy for your family
  • Lastly, you can live in the prime of health with a healthy lifestyle free from financial worries

What is personal financial wellness? 

In literal terms, personal financial wellness is the financial wellness of an individual. When you take steps to become financially healthy, you are said to be practising personal financial wellness. 

Personal financial wellness usually consists of four major elements which can be described below – 

The feeling of control

Those people who have good financial health tend to have a feeling of control over their day-to-day and monthly finances. These people tend to pay their bills on time and do not have to worry about having enough money or not. 

Capacity to absorb a financial shock

Personal financial wellness also includes the capacity to absorb a financial shock or financial crisis. This can include either a car accident or being laid off from a job temporarily. In such situations, the individual would have safety provisions such as savings, insurance or investments which would help absorb the financial loss suffered.

On track to meet the financial goals

Another important element of personal financial wellness is the ability to make provisions for future financial goals and meet such goals easily when the time comes.

Flexibility in making choices

Individuals having good personal financial health enjoy financial freedom which allows them to make choices for enjoying life. This can be taking a family vacation, going out to dine, spending more time with family, etc.

There is financial flexibility by which individuals can do what they value the most and what makes them happy. In other words, this can be said as having a sense of financial freedom in the present. 

Financial wellness tips – How to build a financial wellness plan? 

Achieving financial wellness is not difficult if you are know-how. So, here are some basic tips which would help you build a financial wellness plan – 

Prioritize  goal setting 

Before you embark on your journey to financial wellness, you need to list down your financial goals which you need to fulfil in your lifetime. Once the goals are listed, you need to prioritize them. Having a clear-cut set of goals, with their timelines, would help you plan for them financially. Some common goals can be the following –

  • Short-term goals
  • Creating a contingency fund
  • Buying a car
  • Buying a house
  • Going on a vacation
  • Long term goals
  • Retirement planning
  • Planning for the child’s higher education
  • Planning for the child’s marriage 

 

Inculcating the habit of saving

You cannot fulfil the goals if you don’t save towards them. Saving is very essential in wealth maximization and you should, therefore, inculcate a habit of saving in a disciplined manner.

The building of a budget

Budget can be said to be one of the most important tools which help in achieving personal financial wellness. A budget will allow in creating an expenditure plan and spending in a very sensible manner. With a budget, it becomes feasible to understand how to spend money and maintain a track that would help in achieving your financial goals.  

Seeking guidance from financial advisors

Once all the aforementioned steps are taken, it’s time for you to create your financial plan. You need to assess the sources of incomes and the outflow of funds so that you know the amount of disposable savings. Then, you need to allocate your savings in various types of investment instruments to create wealth. Financial planning is an art where you need to know the best saving avenues which suit your risk profile and investment strategies. You also need to choose the avenues based on your investment horizon. So, you need expert financial advisors who would help you create a sound financial plan. Seek help and assistance from qualified advisors to create a foolproof financial plan which would help you achieve financial wellness.

What is financial wellness in the workplace?

Employers today give utmost importance to the financial health and well-being of their employees as it is rightly said that “a happy employee is a productive employee”. Financial wellness at the workplace can be said to be a situation or scenario in which the employees are financially healthy. They know how to manage their finances judiciously, how to spend money smartly, invest and even save money. Financial wellness at the workplace affects productivity in the workplace and employee morale. Hence, employers in recent times emphasize employee financial wellness.   

When the employers are concerned about the financial well-being of the employees they tend to provide support to their employees in the form of employee financial wellness programs to achieve financial wellness at the workplace.

Let us check out some of the major reasons why financial wellness at the workplace is important

Increases productivity at the workplace

According to financial research reports, employees having financial problems get distracted from their professional tasks and spend a considerable amount of time worrying about finances. Ideally, this time should be spent on accomplishing tasks at the workplace thus leading to a decrease in productivity at workplaces.

Improves the physical health of employees

There has always been a connection between financial health and the physical health of employees. If employees can obtain financial guidance at the workplace it would help improve the employee’s financial wellness and also lead to the improved physical health of the employees.

Reduces absenteeism

Employee financial wellness surveys of various organizations state that there is an increased rate of absenteeism at the workplace if the employees are under any kind of financial stress. Financial education and support at the workplace would ensure employee financial wellness and thus reduce the absenteeism at the workplace also.

Employees want financial wellness at the workplace

Today all employees in an organization especially the millennial expect to have employee financial wellness programs at the workplace for obtaining financial guidance. Even the employees belonging to Gen X also prefer joining those organizations which provide good support in financial planning. 

Clarification on confusing financial topics

With the help of employee financial wellness programs, employees can understand technical financial concepts and the solutions available to them. 

Building loyalty of employees

Employee financial wellness assessments reflect the fact that employees especially remain loyal and prefer working with those employers who understand their financial needs and offer them good financial benefits.

Keeps employers competitive

Employee financial wellness programs are the best way adopted by employers to remain competitive in the market. To draw the best talents towards an organization the employers must design a recruitment strategy that should include the promotion of the organization’s employee financial wellness programs on a large scale.

How to achieve financial wellness at work?

To achieve financial wellness at the workplace, employers need to provide effective employee financial wellness programs. 

For the design or preparation of a successful employee financial wellness program, employers can use the four basic key steps mentioned below – 

Understanding the current financial health of employees

The main objective of this step must be to understand the financial health, the financial needs and requirements of the employees. In other words, the employer must try to take into consideration the temperature of the financial wellness of the employees.

Choosing and customizing the program

Once the employer is aware of the financial wellness needs of the employees, it should choose the most suitable employee financial wellness program. There are a lot of financial wellness programs available in India and the employer should choose a program which would fulfil the object with which the plan was chosen.

Once the plan is chosen, customization is needed. There is no ‘one size fits all’ approach when it comes to financial wellness programs. Each program needs to be tailor-made according to the needs and wants of the employees.

Drive employee engagement and participation

A financial wellness program would be successful only if employees engage and participate in the program with enthusiasm. It is, therefore, the job of employers to boost employee participation. This can be done through incentive-based approach for the employees to undertake the program. Moreover, awareness sessions should be held highlighting the importance and the aspect of the financial wellness program in the context of employees.

Measurement of the value

Only implementing the financial wellness program is not enough. Employers should also evaluate the value provided by the program conducted. This can be done through the Value of Investment (VOI) approach for the evaluation and improvement of the employee financial wellness programs. VOI can be used by employers to find out about the success of the employee financial wellness programs by taking into account various intangibles such as improved productivity, higher morale of employees, reduced rate of absenteeism, etc. This quantification of the financial wellness program’s success will help in creating deeper insights into the impact created by the workforce on financial wellness on business outcomes.

What is the exact meaning of financial wellness?

Financial wellness can be said as the ability by which the current financial obligations can be met along with the initiative to afford new opportunities.

Why are most of the companies adding financial wellness services to the package of employee benefits?

Many companies have realized that by helping their employees in learning financial wellness would be helpful in increasing the revenue of the company. Nearly 80% of the employees in an organization admit to the fact that their financial issues affect the productivity of the organization. They utilize the work time in dealing with their financial issues which affect employee engagement and the company's revenues. So, if the organization would help the employees in achieving financial wellness it would also be beneficial for the company's financial health.

Is it right to say that employees are expecting employee financial wellness plans as a part of an employee benefits package?

Yes, most of the employees while joining a particular organization keep financial wellness at the workplace a major consideration.

Are there any benefits obtained by the companies if they are adding financial wellness benefits into their employee benefits?

Yes, companies are obtaining various benefits like employee satisfaction, employee loyalty, and increased employee productivity and employee engagement by including employee financial wellness in the employee benefits.

Isn’t it that an organization is getting too personal with its employees by offering employee financial wellness programs along with the financial benefits package?

It might seem somewhat personal but it also conveys a very strong message that the organization is concerned about the well-being of the employees and this goodwill would be beneficial for the organization.

Is considering financial wellness at the workplace such important even when an organization is paying very well to its employees?

Yes, even if an organization is paying well to its employees; employee financial wellness surveys say that most of the employees always face some financial issues and experience stress due to these issues. So, the financial wellness plans are not only about the money rather organizations experience great returns in terms of employee satisfaction and performance if they introduce financial wellness plans for their employees.

How many organizations on average are including financial wellness programs into benefit packages?

Around 85% of the surveyed organizations are including financial wellness programs into the employee benefits packages.

Is it necessary to include employee opinions while the design of the employee financial wellness plan?

Yes, it is necessary to include employee’s input while the designing of the employee financial wellness plan as it would be helpful in personalizing the wellness plan and also employers can know the reasons if employees do not participate in the plan pro-actively.

How important is communication in employee financial wellness programs?

Communication plays an important role in saving the employee financial wellness plans. It is quite important to educate the employees about the benefits of the employee financial wellness plans so as to motivate them to participate pro-actively into the plans.

List some of the ways by which an employer can invest in the workforce's financial wellness initiatives.

Some of the common methods of implementing employee financial wellness plans can be by offering financial educational materials, offering access to budgeting apps, student loan assistance programs, sending out budget templates, lunch-and-learn programs on how to create a budget, etc.

Steps to Bring Financial Wellness at Workplace

Steps to Bring Financial Wellness at Workplace

Financial wellness is nothing but productively taking charge of your own finances. The more successfully you do it, the better you are deemed. If you manage your economic life properly, you effectively succeed in bringing financial wellness into your life. If you fail to manage it properly, you will face many challenges in your economic path.

Everyone struggles with financial wellness at some point or the other, but with proper training and guidance, one can overcome the hurdles. Financial wellness is important because it brings forth mental peace and rids a person of undue stress and anxiety. When a person is at peace, he or she functions very well and the productivity at work increases as well. So if you are a business owner, you need to take charge of the financial wellness plan of your employees.

Doing this will help your employees to a great extent and will also drive in more profits your way. Read on to know more.

Why is financial wellness important?

Financial wellness at workplace is very important. This is because the financial journey of an employee essentially begins from his or her workplace. The salary earned is the largest and for many, the only source of money. Sadly, many employees live on a paycheck-to-paycheck basis. They are unable to manage their expenses and end up with practically no savings. This is why it is crucial for an employer to step in and ensure employee financial wellness takes place on multiple levels.

 

Here are the most common reasons why many people struggle to achieve Financial Wellness on a day-to-day basis:

1) Faulty debt management –

Many employees may be struggling because they have too many loans and no idea how to repay them. Proper debt management is an integral component of financial wellness plan. If an individual has a student loan, a home loan, a car loan and a personal loan that he is repaying, it will become difficult for him to clear all the EMIs.

Myth: At times, people also end up taking additional loans to manage their existing loan liabilities. This causes havoc to their financial wellness and brings forth excessive stress and anxiety.
Truth: This is the biggest reason for a lot of people to fall into the debt trap!

2) Unwillingness to make a budget –

Although simple it may sound, most people are either unwilling or unable to follow certain basic financial rules such as making a budget for themselves. No matter what the earning and the spending is, a proper budget definitely needs to be in place. Without a budget, aimless spending can happen and that can lead to further financial hardship for a person who is already struggling with his money!

Myth: People feel that since they don’t have too much of a disposable income and they almost live from salary-to-salary, creating a budget and sticking to it is of no use.
Truth: This is a misconception, as a budget helps you to spend smartly and save, even when your earnings and low.

3) Tax inhibitions –

Taxation is an integral part of everyone’s financial lives. Whether they pay a huge amount of money as income tax each year or not, understanding the tax structure is crucial. This is especially true since there are two income tax regimes that can be chosen.

Myth: Faulty knowledge of the taxation norms leads to many challenges that range from tax returns not being filed on time to avoidance or high interest on overdue taxes! These factors pile up the financial problems for your employees and keep them away from achieving financial wellness.
Truth: A proper understanding of the taxation norms might enhance the financial wellness of your employees.

4) Faulty investments –

There are many investment opportunities available in India. From the basic post-office saving schemes to the more complex investment options, your employees can invest their money in various ways.

Myth: Proper information about investments is only required if the investment corpus is high.
Truth: A lot of people may not have proper financial knowledge about investing properly, as per their financial capabilities and risk-taking abilities. This leads to faulty investments that subsequently lead to financial disasters.

5) Poor financial literacy –

And finally, it is common to find a deficit of correct financial understanding among employees in general.

Myth: Everyone seems to know about the basics of economics such as savings, investments, taxation and so on.
Truth: However, if you dig deeper, you will find that the knowledge is very limited and often the financial literacy is very poor. This is one of the main reasons why they fail to achieve financial wellness plan.

As an employer, it is your duty to make sure no employee working in your organisation faces financial hardships due to the reasons mentioned above. You need to take charge and implement financial wellness at work. Thankfully, there are some very effective ways in which you can achieve this.

Read about the importance of financial literacy at workplace

 

Top #3 Ways to achieve financial wellness at work:

You can help your employees achieve financial wellness in the following ways:

1) Helping them make better financial decisions –

As stated above, making poor financial decisions that range from not filing the taxes properly to investing incorrectly, your employees end up losing a lot of money that makes their financial life a mess.

Pro Tip: Help them to make better financial decisions by counselling them on how to make the best financial decisions.

2) Training programs to inculcate good financial skills –

An employee needs to be financially skilled to take care of his own financial wellness. This requires training over a period of time.

Pro Tip: Once your employees understand the basics, they will be more skilled to make the correct financial moves independently, and this will be a major step towards a comprehensive financial wellness plan.

3) Helping them to reduce financial stress –

And finally, your employees can only achieve financial wellness when they have a calm and worry-free mind. If they are constantly worried about money matters and how to manage their monetary duties, they cannot focus on anything else. As a step to bring financial wellness at workplace, you need to help your employees to let go of this stress.

Pro Tip: Offer therapeutic facilities such as access to a counsellor, mental relaxation games, access to better healthcare, etc. Becoming stress-free is the first step towards achieving financial wellness at work and in life.

Rather than organising one-off workshops or training modules, it is always better to integrate the employee financial wellness programs holistically into the work ethics of your company. This is an important step towards bringing financial wellness at workplace. Train and counsel your employees continue to make sure financial wellness at workplace happens on a regular basis and your employees get their economic live son track.

Are your employee feeling financially stressed? Here’s How to Help! Read our blog to know more

 

Financial wellness and income – the correlation

Financial wellness does not solely and wholly depend on the salary of an employee. A person who earns a few thousand rupees a month might be financially well and sound because he lives within his means saves and manages his financial duties with proper care. On the other hand, a person who draws a salary of Rs 5 lacs a month might be in a financial mess due to his extravagant lifestyle, a habit of overspending and poor financial literacy.

This analogy proves that it is not always the volume of the salary that ensures employee financial wellness. The individual’s financial literacy and money management skills are of extreme importance. Every employee has a different degree of financial knowledge and, as is evident from the points mentioned above, his or her financial wellbeing belongs greatly upon it.

It is, therefore, a very good idea for you, the employer, to ensure financial wellness at work by organising holistic financial literacy programs that benefit all the employees of your organisation.

Download a complete guide on Financial Wellness for FREE!

 

Designing programs to increase financial wellness at workplace

A compassionate employer who genuinely cares about the wellness of his employees will not fall short of ensuring that the employees receive the correct type of training, as per their requirements. To design the best programs to help your employees, you first need to evaluate the following:

1) Evaluate and assess the pay-structure of the organisation –

Before looking towards the employees to assess their financial statuses, you need to take a good and hard look at some of the facilities you offer to them. A major area is the pay structure of your organisation. Are the salaries you pay at par with the industry standards? Are you paying your employees too less? You need to evaluate this aspect and ensure your workforce is getting what they deserve. If the wages are too low, it is normal for people to worry and struggle financially.

2) Evaluate the financial literacy levels among the employees –

As mentioned above, all your employees may not be at the level of economic literacy. So before a financial wellness program is designed, ensure you understand the financial literacy levels of the employees and design or employ pieces of training that can help them to the greatest extent.

3) Evaluation of dependency on other financial aids –

Many people depend on additional financial aids like payday loans or personal loans. The dependency on such tools can prove to be very harmful in the long run and pull your employees into deeper financial distress. Make a truthful assessment on the overall dependency on such aids and see how you can help them get out of the trap.

Once you conduct these assessments, you will know where your employees stand. You can segregate them in groups and offer effective financial wellness programs that would help your employees to overcome their monetary hardships and also free them of stress and anxiety.

 

What does financial training comprise of?

There are many different forms of financial training available. However, an effective program would surely educate your employees on the following topics:

Step #1: Saving money –

Saving money on a regular basis is of utmost importance and is perhaps the most effective step towards achieving financial wellness. You need to train your employees on how to save money. The financial training material must comprise of this area as without proper savings, an employee cannot achieve his long-term financial goals.

Step #2: Budgeting –

As stated, making and maintaining a budget is of great value. But many people do not know how to make a budget. Making a budget does not simply mean noting down the incomes and expenditures. A budget is a plan and needs proper designing. A good financial wellness training program can tell your employees all about budgeting.

Step #3: Planning for their retirement –

It is crucial for all individuals to plan for their retirement. You are not going to pay for the expenses of your employees once they retire, so you need to make sure they set up a retirement fund early on in life. A retirement corpus needs to be created and maintained diligently and a good financial training program would tell your employees how to go about this.

Step #4: Investing –

Investing money in the first product you come across can be tremendously dangerous! Investing without proper knowledge and understanding is much more dangerous than not investing at all. Train your employees about the correct ways in which they can invest their money as this would be a great step towards bringing financial wellness in their lives.

Step #5: Maintaining a proper credit score –

Do your employees know about the concept of credit score? It may seem like a simple concept, but a large number of people do not even know it exists! Yes, that is correct. You need to inform your employees about the significance of having good credit and what a high credit score can do to their financial capability.

Once your employees understand these fundamental financial concepts, they will begin to improve their financial wellness, which would be of help to them and to you as well.

 

Importance of employee financial wellness

An organisation that has a happy workforce is an organisation that records better profits. This is an actual, hard fact because your employees are ultimately the backbone of your firm that keeps it upright.

The reasons that make employee financial wellness important are:

1) Better performance –

An employee who is constantly bogged down with stress and anxiety will find it very difficult to concentrate on anything else. His mind will remain clouded and he will have little enthusiasm left. This will greatly affect his work productivity as he will not be able to focus on the assignments he needs to complete. If however, he is stress-free and relaxed, he will be more enthusiastic and focused and will deliver very well at work.

2) Increased loyalty –

If you help your employees to achieve financial wellness, they will surely be grateful to you. The gratitude would make them better and more loyal and this would help you to have a strong and reliable workforce. After all, the efforts of your employees would ultimately bring in the profits, so you need their support in every possible way.

3) Good reputation for the firm –

And finally, your efforts to bring forth financial wellness at the workplace would surely fetch some good amounts of reputation. You will be known as an employer who takes care of his employees and worries about their financial wellness. This would not only win you accolades, but it would also make the most talented candidates eager to work in your organisation.

Keeping these points in mind, it can indeed be said that regular employee wellness programs must be deeply integrated with the work culture of the organisation.

Here is a more detailed guide on financial wellness. Download the guide for FREE

 

Ensuring proper implementation of financial wellness

As an employer, you need to ensure your employees are financially well. Do not treat this merely as a duty that you need to fulfil. Rather, be empathetic and treat this as a necessity for the overall wellness of your company. Hire a proper institute who can train your employees and help them achieve financial wellness in a proper and apt manner. There are some highly competent academies such as Koppr Academy that offer excellent financial courses for employees.

You can collaborate with Koppr Academy and enrol your employees for some of the best financial literacy courses. They can learn about several economic areas such as investments, taxation, budgeting, etc when they attend these courses. The courses are available online so your employees can access them at their own convenience. The course material is designed by some of the leading economists, which prove to be highly effective.

In a nutshell

To put it in a nutshell, financial wellness at work has no alternative. As the employer, it is your responsibility to ensure your employees achieve financial wellness at every level. Keep all the tips and guidelines mentioned above and you’ll surely be able to provide the help your employees need. Remember, an employer is highly regarded and trusted by his employees. You must make the most of this and offer all the help you can to your invaluable workforce.

Are Your Employees Feeling Financially Stressed? Here’s How to Help!

Are Your Employees Feeling Financially Stressed? Here’s How to Help!

Do you know that how you help your workers deal with financial stress during the outbreak could have a lasting impact on retention efforts?

Employees at every level are dealing with amplified financial stress. According to a survey, about 60 percent of Americans attested to the fact that Coronavirus has harmed their finances.

Millions of people the world over are coping with Financial stress and Financial anxiety while dealing with the fear and reality of death and disease.

Based on a poll conducted by the Kaiser Family Foundation, close to half (45%) of U.S. adults have reported that their mental health has been negatively impacted due to worry over the virus.

 

How employers an help employees deal with financial stress

Coronavirus is everywhere, and there is a general fear that employees will get it and infect their families.

Employers worldwide are trying to get their employees to work from home; to avoid contracting the virus.

Employees are worried about financial stress; thus, the need to help arises.

Before going into details about ways employers can support employees during the Covid-19 pandemic, we need to consider several areas employers can assist in.

 

How to take care of your employees amidst the COVID 19 outbreak

These include:

Financial Wellness

Financial wellness deals with the process of learning how to manage financial expenses successfully.

In short, your employees’ financial wellness is their ability to have a healthy economic life.

Organizations can support their employee by ensuring they get the best retirement savings, monthly budget, credit card debt, and a substantial paycheck. Lecture sessions can be organized to train them on how to go about it.

Here a complete guide on Financial wellness, Download it for FREE!

According to a survey, most employees felt they’d be working into retirement.

 

Here are some financial wellness tips for employees:

 

  • Prepare for Unexpected Expenses

You must avoid living from paycheck to paycheck to avert disaster. Because a little problem can eat up all your budgets.

Waiting until the next paycheck means living with a periodic background check.

Financial stress is terrible for everyone; thus, you need to invest in positive financial wellbeing.

You can figure out your amounts, budget for your goals, and budget for spending.

 

  • Make Provision For Emergency Savings

The moment you don’t have any emergency savings, it’s easy for a small financial issue to disturb your life. For instance, you run out of gas before the estimated time, and you don’t have the “rainy day” fund to pay for the refill.

Not being able to take the food quality and quantity you need harms your productivity.

An employee must find out how much they need in their emergency fund and fill it up.

The aim is to have cash reserves to cover most emergencies that come along. Emergency savings is an integral part of your financial wellness.

 

  • Clear Your High-Interest Debt:

Paying off your debt is one of the financial wellness tips for employees.

It will allow you to breathe a little easier daily, knowing your debt is decreasing, not increasing.

Plus, when they’re all paid up, you can focus on your leisure goals.

To get there, employees must move debt around to minimize interest payments and pay it off quickly.

They can also transfer some of their higher-interest obligations to a lower-interest credit card by calling their credit card company or bank.

 

  • Make Good Use of Tax Advantages:

Taxes are costly because they generally equate to a lot of money. Money that can function as emergency savings or used to pay off debt.

Employees should take advantage of every chance to “legally” avoid paying taxes on earned income.

By using employee benefits to maximize tax advantages, your employee financial wellness will significantly improve.

 

Why is Financial Wellness Important

Financial Anxiety

According to science, Financial anxiety is a feeling of worry, fear, or unease about your finances.

Consistent thinking about your monetary goals and how you’re not reaching them can be a sign of financial anxiety.

Employers can make provision for a financial assistance program.

Employees can also manage Financial anxiety by focusing on things they can control and doing things that can help them stay healthy as much as possible.

Later in this article, we’ll discuss how to manage financial anxiety.

 

Paid Leave

Employers should provide up to two weeks of paid leave related to COVID-19, according to The Families First Coronavirus Response Act (FFCRA).

It’s not only the employee that will benefit from this, as employers are also eligible for two new refundable payroll tax credits.

The Coronavirus Aid, Relief, and Economic Security Act (CARES) put in place close to $350 billion in partially forgivable loans to small businesses and nonprofits with 500 or fewer employees impacted by Covid-19 to help cover payroll and temporary closings.

Employees need to check with the H.R. department of their company and inquire about any benefits and paid leave they may be eligible for.

Here’s how to take care o your employees during covid

 

Unemployment Resources

The naked truth is that most employers, especially small businesses, will have to sack and lay off employees during the COVID-19 pandemic.

However, employers should provide severance pay, extend health benefits, and state a tentative rehiring date in case the business plans to continue running.

Employers should also aid employees with the unemployment process.

 

Mental Health

Mental health platforms that provide teletherapy have noticed a rise in usage during the Coronavirus pandemic.

People become anxious, depressed, isolated, and lonely as they observe social distance and stay home to limit the spread of the virus.

Providing resources to those who are struggling with their mental health during this crisis is vital.

Employers should evaluate their present mental health benefits and consider telehealth solutions.

Read more about mental health at workplace

 

Virtual Recruiting

It’s no longer news that employers in essential services are struggling to fill open positions and comply with social distancing restrictions.

For instance, CVS Health will recruit 50,000 full-time and part-time personnel through virtual job fairs, interviews, and job tryouts.

Employers can offer assistance to unemployed people by using virtual solutions such as video conferencing for interviews.

There is no need to suspend the hiring process if you have the budget to employ.

 

How to Manage Financial Anxiety

In the previous section, we discussed how employers could help with their employees’ financial anxiety.

In this section, we’ll discuss how the employees can manage their economic stress during the COVID-19 pandemic.

Enquire About Your Eligibility It’s normal to be anxious about whether you will be layoff at work or not.

If there is a provision for sick leave at work, you should make use of it now.

Read more about impact can financial stress have on you.

 

  • Positive Mindset

You need to focus on the functional aspects of your finances instead of the negative issues.

Although thinking positively won’t conjure any magic, it can help calm your fears.

It can also help you recognize and appreciate your financial strengths, which could proffer solutions to some of your problems.

Get a piece of paper and start listing the positive aspects of your money management skills.

If things are tight or money is causing you anxiety, take a second to focus on where you’re going right. It will help you stay calm and clear your head.

 

  • Prioritize Your Payments

You need to prioritize which bills you’re going to pay first.

Take care of your essential need, such as food, shelter, utilities, clothing, and transportation first. Just be focused on taking care of your necessities while doing your financial planning.

Download a complete guide on Financial planning for FREE! There is no need to shop for attire, so resist any urge to engage in any retail therapy.

Be on alert with rules about rent and EMI payment as some states are implementing programs that prevent evictions during the pandemic.

 

  • Look for Alternative Sources of Income

Since you’re not sure if your job will be affected by the pandemic, you may want to start looking for an alternative source of income.

You may make use of the opportunity to join the freelancing market.

Some companies are desperate to hire freelancers presently.

You can use any soft skills you possess to earn extra cash from home.

 

  • Manage Your Mental Health

Several studies have linked financial distress to poorer mental health.

The more stressful you’re about money, the harder it may be to manage your psychological wellbeing and vice versa.

You can manage your mental health by practicing good self-care.

Make use of the pandemic to identify and practice healthy coping skills.

Since you can’t go to the gym or go on an outing with your friend, it’s essential to determine what coping strategies work best for your stress level. Lastly, you also need to exercise more.

 

Ways to Help Reduce Financial Stress of Employees During Covid-19

With the current Covid-19 pandemic, your employees are stressed financially.

Employers are tasked with helping them reduce financial stress because it can affect their productivity at work.

Here are ways to reduce employee financial stress.

 

These include:

 

  • Quick Access to Earned Wages:

Presently, most workers are working from home. They need to pay the rent, and the bill for purchasing groceries is getting higher.

Sometimes when hourly employees need quick cash, they run to expensive payday lenders that charge excessive percentage points in APR for a short-term loan.

Employers can help to put money in the bank before payday. You can simply reduce their next paycheck by the amount they draw early.

 

  • Empower Employees to Master their Money:

A considerable percentage of people who earn six-figures live paycheck to paycheck, and this causes financial anxiety. Plus, presently, the next paycheck is not guaranteed. Thus, it’s no surprise to learn that some hourly workers face a severe cash crunch.

Employers need to educate their employees on how to master their money and have proper financial planning. You will offer them the best tools and benefits.

You need to treat them as partners for long-term success because you will be setting yourselves up for a major win-win.

Read more about employee benefits in India

 

  • Give Employees the Chance to Choose their Payday

Many organizations are conversant with a typical payday schedule such as the 15th and last day of Monday, every Friday, or weekly schedules.

By offering early access to earned wages, employees can effectively choose their payday.

Due to the pandemic, most employees are stuck with their families at home, so the bills continue to surge.

With this provision, they can shift around their payment schedule to better align with their laws and financial needs.

 

  • Organize Coaching on Debt

Most public schools don’t make provisions for a lecture on personal finance or financial planning.

Due to the lack of training from parents or friends, most people don’t know how to handle things such as debts, credit cards, and bank accounts.

Financial classes, coaching, and assistance programs will do an excellent job of helping employees overcome financial strains on their own.

It can begin with a simple tip or piece of advice. Employees having a better understanding of their financial options will increase their satisfaction.

Employers have the power to make it easier for their employees to find financial stability.

Here’s a Free Course on Financial Planning, Enroll today

 

  • Automated Savings

Employees need to automate savings to escape the paycheck-to-paycheck cycle. Based on the Federal Research report, nearly 40% of U.S. households could not afford a $400 emergency from savings.

Thus individuals and families must maintain an adequate emergency fund.

Employees can automate savings by going through a split direct deposit from their payroll provider.

Plus, they could turn on a recurring transfer from checking to savings on payday at their bank.

 

Conclusion

And there you have it – ways to help your employees deal with financial stress during the Covid-19 pandemic.

Helping your employees in these ways is a good start towards improving your workforce’s financial wellness and could lay a foundation for implementing a full-blown employee financial wellness program in the future.

From those mentioned above, it’s vivid that you need to turn your employee’s financial stress into financial wellness. Employers must know what their employees need help with and what they worry about.

The Importance Of Financial Literacy at Workplace

The Importance Of Financial Literacy at Workplace

To ensure the productivity of an organisation is at its peak, as an entrepreneur you must have the best employees. However, an organization is a mixed-bag of employees. It is the employees’ hard work and dedication that ultimately drives in the profits and improves the wellbeing of a company.

However, if your employees are healthy, happy and eager to work, as a business owner, you will see a positive change in the fortunes of your firm. On the other hand, if they are stressed and anxious, you will see the figures drop.

One of the most important reasons for stress among employees is financial worry. A majority of the people suffer from money-related problems as their financial management skills are not the best. It is, therefore, your duty and responsibility to introduce a financial literacy program in the workplace to ensure your staff understand the basics of financial literacy and manage their money better.

Once your employees are financially literate, they would be able to manage their own money much better and hence their stress levels over financial issues would eventually reduce! This would surely lead to healthier and happier individuals who would contribute immensely to the growth of the organisation.

The importance of financial literacy

As stated, it is very important to introduce the concept of financial literacy among your employees.

Here are a 5 reasons to highlight the importance of financial literacy:

1) Understanding investments –

Very few people can solely rely on their salary to take care of all their financial goals. Wealth creation is extremely important and that mainly happens with the help of investments. Unless you invest a part of your money, you will seldom see it grow and you will struggle to meet your long-term financial goals.

Pro Tip: A good financial literacy program teaches your employees about investments and guides them on how to multiply their wealth with the resources at hand.

2) Managing debt –

Borrowing money has become tremendously commonplace in the modern era. There are very few individuals who do not opt for bank loans. From home loans to personal loans, from education loans to car loans, an average person has many loans against his name. However, managing this debt can become a challenge if a proper debt management system is not implemented.

Pro Tip: A good financial literacy training talks about debt management and ensures people don’t struggle to pay off the loans they have.

3) Effectively clearing bills –

Apart from loans and EMIs, most of us struggle to pay a fat bunch of bills each month. From credit card bills to utility bills, the total bill payment amount is large enough to cause stress and anxiety among many!

Pro Tip: This is why you must insist that your employees undertake a financial literacy program and understand the ways in which the bills can be effectively cleared each month.

4) Planning for retirement –

As a responsible employer, you will pay your employees their monthly salaries. This would help them to take care of their livelihoods. But what happens after they retire? You would not be paying them their monthly salaries any longer so how would they sustain?

Pro Tip: To make sure they have a financially secure retirement, you need to train them about retirement planning. Do this with the help of a financial literacy program at the workplace.

5) Budgeting –

And last but not least, the importance of financial literacy at the workplace lies in teaching the employees budgeting.

Pro Tip: They need to know all about making a budget and sticking to it as that is the only way in which they can cater to their monetary needs and still save money for their future.

A good financial literacy program touches upon all these areas and provides wholesome training to the employees of the company.

What do financial literacy programs look like?

A financial literacy program, as the name suggests, is a comprehensive education program that focuses on teaching the participants the basics of monetary management. Here are some common components of a standard financial literacy program:

1) Step #1: Budgeting and saving –

Unless a part of the money earned is saved, a person will struggle financially. A financial program aggressively trains the participants on how they can budget and save. Making a budget may seem like a simple task, but in reality, it is actually quite complicated.

One needs to know their spending patterns, financial responsibilities, debt system, etc and then make a proper budget. Once a good budget is in place, the payments and savings both can happen. Budgeting and savings thus form an important part of any financial literacy program.

2) Investments –

As mentioned above, investments are the key to financial independence. However, the investments should be proper and effective, sadly, a poor investment can lead to heavy losses and the investor may even end up losing all his hard-earned money.

This is why a person requires extensive training and guidance before he begins investing his money. A financial training program tells the participants about the different investment channels, the risks associated, etc and helps them to choose the correct platform.

3) Taxation –

Taxation is a very important part of any financial plan. Most people who earn incomes pay taxes in some form or the other. Though commonplace, taxation is still a topic that baffles many.

If your employees are a bit confused about their taxes, enrol them in a financial literacy program and help them to understand all about the taxation system.

4) Maintaining good credit –

A financial literacy program teachers employees about maintaining good credit. There really is no alternative to having a good credit score as that allows a person to enjoy sound financial wellbeing.

Your financial journey becomes a lot smoother if you maintain good credit and this is why it is so important to learn about it.

Want to know more about financial wellness and it’s importance, read our blog to know more.

5) Staying away from frauds –

Sadly, frauds and cheats are rampant in the financial world. Many a time, unsuspecting people fall prey to these fraudsters and end up losing all their money. From disguising as bank employees to investment gurus, these fraudsters are there at every corner.

When your employees undergo a financial literacy program, they learn about the ways in which they can identify and subsequently, stay away from these cheats.

As you can see, these are very important financial topics that everyone needs to understand. When you arrange for a financial training program, your employees get wider knowledge about these economic matters and that benefits them to a large extent.

The cost factor – Financial education doesn’t have to be expensive

As a small business owner, you may be apprehensive about the costs involved in arranging a financial training program for your employees. The good news, however, is that such programs are often affordable and never too expensive to worry about. There are some very good and successful financial academies that offer customised training programs to company employees at very economical costs.

Options in financial literacy for employees

These days, employers around the world opt for new and interesting ways to impart financial training to their employees. From financial advisors coming in, to online courses being set up, there are indeed many options for imparting financial education among the employees. Some of the most popular options include:

1) In house financial advisor –

You can start off by employing a financial expert who can offer his or her advice to the other employees whenever needed. Many a time, employees feel tremendous stress and anxiety and fail to cope up with their financial troubles.

Having help at hand at such times can be of immense help. Also, when the advisor is a co-worker, the employees feel more comfortable discussing their issues, in comparison to discussing them with a complete stranger.

2) Option for teleconferencing –

Your next option is to set up a teleconferencing facility. You can tie up with a financial education firm and offer a phone number to your employees.

They can call the number and speak to the financial advisors and get the financial training they need.

3) Arranging physical workshops in the office –

Another option is to arrange for a financial literacy workshop in the office premises during office hours. There are many trainers who would come down to your office and conduct a fixed-duration workshop.

It can be a monthly affair or a bi-yearly one, depending on what your requirements are. The employees can join the workshops and get the training they need to ease out their financial struggles.

4) Signing up for online courses –

Many offices worldwide opt for the very popular option of online financial courses. There are many academies that offer excellent financial literacy for employees through these online courses.

In fact, there are multiple courses on Financial Literacy for your employees on Koppr Academy that can benefit your employees. You can opt for the same. All you need to do is to provide the login details and inform the time and ask all the employees to log in. they can receive the training remotely and stay one step ahead in the economic game.

Opting for Online Financial Literacy Courses on Koppr would not only be cost-efficient but make the most sense in the post-COVID era where everyone can access the same at their ease without having any physical interaction. This would keep their productivity ongoing.

You can opt for any of these options to ensure your employees receive the financial education and training they require. You need to ensure that the training they receive is of superior quality. Unless this is ensured, your employees may not gain completely from the training you arrange.

Benefits for the organization on training the employees on Financial Literacy

If you financially sound employees, your organisation will benefit immensely. Here are some ways in which that can happen:

1) Increase in productivity –

There can never be enough emphasis on how important and beneficial it is for the employees to be mentally fit. If they are constantly bogged down by stress and anxiety, they will remain preoccupied and that will prevent them from delivering their best. Even the most talented employees won’t be productive enough for your business to flourish.

And as we all know, financial stress is one of the main reasons why people lose their mental stability and get into tremendous bouts of anxiety. This causes them to lose their focus. If their finances are sorted, they are more relaxed and can focus more on the job at hand. This would increase the levels of productivity and in case benefit your organisation to a large extent.

Read a blog on How can you improve the mental health of employees in your workplace?

2) Easy to retain employees –

An employee who is financially stressed would be very tempted to change his job and opt for a new position where the salary is just marginally higher. He or she may not even give a lot of thought to the process of changing jobs at such a time. This can be quite damaging to your firm, as losing a capable employee who you trained over the years can be detrimental to the company.

If the employee is financially secured, he or she will be happy to earn the current salary and definitely will not quit the job just for the lure of a few extra bucks.

Here are top 9 employee retention strategies that will help your to retain the best talent in your organization.

3) Good reputation for the company –

When stressing the importance of financial literacy for employees and arranging various training programs for the same, you end up taking good care of your workers. This works in your favour and also increases the reputation of the organisation. People identify you as a good employer who thinks about the employees.

This increases your reputation in the industry and the best candidates want to work for your company. So financial literacy for employees has this added benefit that you can easily amass.

4) Financial gains –

Last but not the least, you get some economic gains of your own when you ensure your employees have proper financial knowledge. To begin with, the employee sick days reduce quite dramatically once the employees know how to cope with the financial stress around them.

Then, there is also a lowered healthcare-related expenditure as the employees stay physically fit and healthy when they are mentally relaxed and stress-free. And finally, employees who aren’t distracted by their personal money matters will definitely perform better and add to the revenue generation of the organisation. All these factors would prove to be financially fruitful for you, the business owner, in the long run.

Any organisation would benefit from having financially competent employees who are happy and perform their best. This is one of the biggest reasons why you should stress on arranging programs that aim to increase the financial literacy for employees.

Collaborating with a good academy

As you can clearly see from the points mentioned above, providing financial training to your employees is of utmost importance and as a business owner, you simply cannot skip doing this. However, you must also remember that providing proper and insightful training is vital. Many employers make the mistake of appointing sub-par financial trainers. This causes a lot of harm and the employees receive poor quality financial education. This leads to more problems and the training proves to be a disaster! You need to steer clear of all such matters. You can start off by hiring or collaborating with a highly competitive and able financial academy such as Koppr Academy.

Koppr Academy is an online financial training platform that offers financial literacy programs with the help of video tutorials prepared by financial experts. The course material is carefully curated and designed in a way to promote financial literacy for employees.

The courses can be accessed online by your employees 24×7. They can learn about various financial aspects such as retirement planning, investments, debt management, budgeting and so on. The courses are very affordable and this makes it easy for you to enrol your employees into these programs.

To sum it up

When it comes to money, most people are still quite conservative and prefer to be discreet. The reluctance to discuss their financial matters and the urge to manage it all by themselves lead to financial stress in many people. This is why you must integrate some methods into the regular work to inculcate the basics of financial literacy among your employees. A good way to do this is to introduce a financial literacy program for your employees.

After going through all the points mentioned above, the importance of financial literacy can not be ignored any longer. So get associated with a good academy like Koppr Academy and provide your employees with all the aid they require and soon you will have a group of financially sound employees who would deliver their best performance at work.

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