5 reasons to include financial education in corporate training

A study conducted at a workplace shows that only 35% of women and 50% of men could answer basic finance questions. This implies that most employees are poor in financial literacy.

However, this shouldn’t be the case. Financial literacy is not limited to only those who work in finance roles. It is a necessity for every employee for their financial well-being.

Therefore, It’s the responsibility of the employer to step up and help their employees by including financial education in corporate training.

Major components of financial literacy

There are a few major components in finance that every individual should learn about:

1. Budget: Budget means the right allocation of money. In budgeting, a person can use money in four ways; saving, investing, spending, and donating. Maintaining the right balance among all the uses allows the person to better manage their earnings, which results in financial security and prosperity.
   
2. Investing: The second major component of financial literacy is investing. Investing includes terms such as indexes, diversification, calculated risks, etc. Learning these terms of investment will help individuals make better decisions with their money.
   
3. Borrowing: Today, borrowing money is easy. Every company now-a-day offers very low downpayment and easy EMI options, which are hard to ignore. But to make an effective decision about borrowing, it is crucial to understand terms such as payment period, interest rates, loan structure, etc.
   
4. Taxation: Income in different forms, such as salary, investment, inheritance, rentals, etc., are taxed differently. Knowledge of different types of taxation and how they are applied to a person’s income is important in order to be financially literate.

5 reasons financial education is important for corporate training

Individuals and companies can benefit by providing financial education to their employees. Let’s know-how:

• It helps employees understand the impact of their actions.
  

When employees see positive results in their finances due to their financial education, they want to help others with the same knowledge. 

And if the company shares some of its insights with them, they can understand how one’s action impacts the company’s performance. Additionally, they may try to tweak their daily activities in order to increase the bottom line. Eventually, they become more responsible with money in general, whether it’s theirs or the company’s. 

• It helps employees make better decisions for the company.
  

With financial education, employees at the manager level tend to make more informed decisions. At the time of making difficult business decisions, they consider multiple angles such as sales, marketing, operation, etc. Still, with financial knowledge, they can add one more angle to their decision and make it precise.

• It helps employees understand the budget of the company.
  

From time to time, employees ask for raises or demand things such as new technological implements in the office. If they are financially educated, they will first calculate whether their request is genuine and actually profitable to the company. 

Does that new Customer Relationship Management (CRM) really help increase productivity and save time while giving positive ROI? Or they want it just because it has beautiful colors and interesting animations.

They can strengthen their case with their financial education if their request is beneficial. But if their request doesn’t justify, they can understand that this will be just another expense for the company.

• It makes employees better negotiators.
  

Financial literacy makes employees better negotiators with their clients. They can impactfully tell the benefits of purchasing the product and portray it as an investment rather than an expense. This mindful conversation increases the probability of swaying the deal to their side.

• It makes employees financially efficient.

An employee with financial knowledge can understand the company’s balance sheet and be efficient in his actions. After getting financially educated, teams now know what actions save money for their company and which ones are not cost-efficient. 

For example, if the team is using a paid subscription service, they may seek a free alternative or unsubscribe to a service they no longer use. 

Summary

Regardless of one’s role in the company, financial education is important for each individual for their personal finance and company. While working in an environment where there’s a demand for financial literacy, getting a financial education will help you make better decisions, negotiate effectively, and measure your action’s impact on the organization.