On managing our personal finances, most people lack basic skills. We don't talk about money with our friends and family. We feel uncomfortable when people talk about money in front of us, and it is one of those things that are not taught in school.
We have been brought up in a society that believes money is a private topic. Yet financial management is a fundamental skill. At particular risk are young adults who get employed or start a business.
This, coupled with a poor saving culture, and we have a generation of employees weighed down by debt. Unfortunately, Kenyan youth learn a lot from our education system, but very little about personal finance. As such, the young generation is ‘thrown into the world’ with limited knowledge on managing finances.
Left to their own devices, they tend to do whatever they want with their money, which they don’t have in the first place, a situation that sees most of them turning to debt and other menaces like gambling.
Recently speaking to a few youth, in their entry level jobs in one of my mentorship sessions, most of them confessed they don’t save.
As a result, they regularly run out of money before the subsequent payday and have to borrow either from their families or friends or take mobile loans to meet day-to-day expenses.
This example is a representation of our youth today. Unfortunately, these are the youth who start their own businesses, become managers and eventually CEOs, raising families.
This is a stark reminder that we have a personal finance crisis among the youth — and it is true of the older generations as well.
What is straightforward is the reality that financial stress impacts employees regardless of age, gender or salary.
PwC’s Employee Financial Wellness Survey 2017, reports that nearly one in three employees report that personal finances have been a distraction at work.
Such employees spend working hours thinking about or dealing with issues related to their personal finances.
Financial illiteracy affects many facets of an individual’s life. In work environments, financial stressors are not only negatively impacting employees, but are costing employers.
Stressed employees are found to be less productive, take time off from work to deal with these difficulties, and are more likely to cite health issues caused by financial stress.
Generally, financial stress leads to productivity losses and increases absenteeism, healthcare claims, or even higher turnover.
Where do we begin to change this trend?
Well, employee financial wellbeing is a growing concern for businesses but also presents an opportunity for employers to invest in financial wellness programmes.
Basic courses in budgeting and debt reduction in addition to the retirement planning would be a great start.
Today, most young employees enter the workforce already weighed down by high amounts of student loans on the one hand and financial illiteracy on the other.
Good employers are taking notice of this and are creating an environment to provide employees with a foundation for better money management.
This is not only good for the well-being of the employees, it is good for the bottomline too.
Employers, meanwhile, gain appreciation from their employees by demonstrating a deeper interest in their lives and building an employee-centric culture.
Introducing financial management lessons is an employee perk of the future.
However, it does go beyond financial well-being. If employees are better at managing their money, perhaps they’ll be better at managing company resources.
Perhaps they will carry with them less stress to the workplace, which certainly impacts their ability to perform at the highest level.
The Government of Kenya has introduced financial literacy as one of the new features in curriculum. The aim is to educate children on money management fundamentals and build a culture of responsibility and personal accountability at a tender age.
With the right approach, employees and employers can reap the rewards of being financially fit.
Ideally, improving financial literacy is like diet or exercise: step one is paying attention and making it a priority.