The Financial Literacy Imperative of 2020

November is Financial Literacy Month in Canada. Current circumstances have contributed to a heightened insecurity about business and personal finance. So, we thought it was appropriate to talk about what financial literacy means during unstable times and consider the elements needed for financial wellness.

In the June 2020 article in Benefits Canada, Kelsey Rolfe reported that employees were very concerned about their financial health. A survey by Canadian Payroll Association found that of Canadians polled 47% were living paycheque to paycheque and 35% felt their current debt level was overwhelming.

Although not surprising, it’s easy to see how these conditions can be stressful to employees, leading to decreased productivity and the risk of mental health issues such as anxiety and depression. Increasing everyone’s financial literacy and wellness company-wide could help improve financial confidence and keep the focus on business.

Let’s start with literacy, which for these purposes means “competence or knowledge in a specified area.” More than being able to read a bank statement or balance sheet, literacy during challenging conditions can require research, discipline, planning, and reassessing financial products, habits, and goals.

The Financial Consumer Agency of Canada (FCAC) has resources available to help Canadians with their finances that are a handy addition to anyone’s financial planning arsenal. But since we’re facing unprecedented financial circumstances, let’s talk about the top things to know when you’re facing tough times in business.

Top Tips

  1. Keep track of money: You may know the not-so-funny John Barrymore quote, “Why is there so much month left at the end of the money?” The majority of us knows the feeling, and it’s easy to discern if tracking is a problem when the follow-up question to Barrymore’s quote is, “Where did it all go?” Whether in business or personal finance, creating and sticking to a budget is the first step in financial wellbeing.
  2. Commit to a spending plan: FCAC’s Budget Planner is a free, interactive tool that lets you create a personalized budget that you can save and update online. It’s also a great start to coming up with a plan to stay on top of your finances or start a conversation in situations with shared finances. Spending can be a contentious issue during even the best of times, so make sure you get buy-in on your plan to ensure success.
  3. Minimize debt: This is where accidents can happen quickly when you don’t track spending or honour a budget. Borrowing can be a useful tool to help negotiate rough patches or grow business, but it requires restraint. Start with the provincial and federal government resources first, and choose wisely when considering credit cards or lines of credit. Remember to borrow only what’s currently needed.
  4. Protect against financial fraud: According to a 2019 survey by FCAC, one in five Canadians was a victim of a financial fraud or scam in the last two years. If something seems to good to be true, or if it’s being offered by an email link or by giving credit card or banking information over the phone, think again.
  5. Understand financial products and services: If you’re unable to pay all of your bills, your financial institution or bank may be able to defer some payments like a mortgage. Know the options, so you can make the best decisions. When talking about property ownership, another big expense can be taxes. The Ontario government recently unveiled property tax relief for employers in its 2020 budget, so be sure to check into any deferments or reliefs that may free up money for other essentials.
  6. Set aside some money for unexpected expenses: If you can, squirrel some money away just in case there’s another restriction period, lockdown, or new personal protective equipment (PPE) requirement. Having a little emergency money equals less future debt and interest charges.
  7. Order a credit report: Ordering a business credit report can help you understand things like your financial viability and the risk of extending credit to a customer. Equifax has a fact sheet that shows the benefits of getting a report, although research failed to yield an answer as to if the report is free or what the associated cost is if a fee applies.
  8. Have a plan to repay debt: Just as you only borrow what you need to get your business through its financial gap, you have to plan on how you will meet the added expense to avoid interest charges or defaulting on a loan. FCAC has a step-by-step guide to repaying debt and free tools such as the Financial Goal Calculator.
  9. Reassess financial goals: As thing improve, you may want to consider a more aggressive approach to paying down debt or saving for unexpected expenses. Conversely, some goals might need to be postponed or changed because of lower profits. Be open and flexible to making changes that best suit your present needs, much like you adapt your business plan as your business changes.

Financial Wellness Programs

When talking about a financial wellness program for your workplace, there are some key considerations to keep in mind. Foremost, your commitment to the financial wellbeing of your workforce will help make the program more successful. Often Employee Assistance Programs (EAP) focus on mental or overall health, but by adding a financial element, you can get staff started in understanding the concepts discussed above.

A survey by Manulife Investment Management showed half of Canadian workers surveyed are looking for advice concerning retirement and investing. Many have used their emergency funds or credit cards to get by since March, and they don’t see their financial situation improving in the next 12 months.

These survey respondents agreed that an employer-sponsored financial wellness program would alleviate their financial stress (75%), and another 90% thought it’s important that employers offer programs.

SAD wellness tips

Founder and chief executive officer of Saij Wealth Consulting Inc. Saijal Patel said in a June webinar that creating a financial wellness program will take more than posting information or organizing one-time events. Patel suggested determining employees’ financial stressors through anonymous surveys that gauge employee knowledge and skill.

Once you’re aware of the areas of concern, you can start targeting the financial information in your program. Because financial matters are highly personal and may involve stigma and shame, making resources available in a variety of formats and methods will help employees access information in a way that’s most comfortable for them.

“Some people just want to learn certain things on their own and [don’t want] to engage. If you hold an in-person event saying, ‘Hey, we’re going to help you [deal with] your debt,’ a lot of employees are not going to show up to that. . . . It’s like admitting they have a debt problem,” said Patel.

life insurance online

Clearly, the style and breadth of any financial wellness program is dependent on the size of your business. Considering an employee benefits plan with an EAP component is an option, as many plans are customizable and more affordable than business owners think.

One timely resource being offered by Credit Counselling Canada (CCC) is a free financial health checkup during Financial Literacy Month. By completing the form on CCC’s website and entering the promo code BEDEBTFREE, anyone can qualify for a free financial checkup and be eligible for a $200 giveaway.

Perhaps what’s most important to remember is that you have the opportunity to support and guide your staff through an incredibly challenging financial time. Whatever help you do provide will go a long way in demonstrating your genuine concern in your employees and their families, and show that you’re investing in their overall wellbeing. Despite COVID-19, at least one truth still holds true: you can’t overextend yourself on kindness.

Bensol Consulting is here to help you and your employees. Whether it’s employee benefits, EAPs, or group retirement savings plan, talk to us. We can customize a plan that’s right for you and your staff. We’re all in this together, and we’re here to help.