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Canadians have a high level of financial literacy, but that knowledge isn’t translating into financial security and wellness.
Mercer’s “Inside Employees’ Minds Financial Wellness” survey of 1,500 employees across Canada found that 51% of respondents stated they were knowledgeable about financial matters — the same percentage of respondents who also scored high in the global financial literacy test. However, seven out of 10 respondents stated difficulty in managing a financial shock (such as 3 months out of work); 39% stated their total monthly loan payment is more than their take-home pay; and 51% stated they are stressed by financial matters.
“Something we see time and time again is financial literacy doesn’t translate into financial wellness,” said Jillian Kennedy, Leader of Canadian DC and Financial Wellness at Mercer in Canada. “It’s a trend that spans all ages, income levels and gender. From productivity to engagement to employee health, it’s becoming increasingly important for employers to be a part of the solution in bridging wellness and literacy for employees.”
Financial wellness reaches beyond retirement security or financial literacy. Mercer lists four components to consider when determining whether a person has achieved financial wellness:
- Do people feel they have control over their day-to-day and month-to-month finances? Do they know what’s coming in and going out, and are they comfortable with it?
- Do people have the ability to absorb a financial shock? If they had to come up with $500 right away, could they do it?
- Are people making real progress in achieving their financial goals? Not just saving for retirement, but meeting more immediate goals such as upgrading a home or saving for a vacation?
- Do people have the financial freedom to make choices that allow them to enjoy life? For example, can they afford to travel? Can they retire when they want?
Findings also suggest while financial-wellness programs are viewed as a major factor in selecting a new employer (30%), few trust their employers when it comes to financial information or advice. In fact, only 40% of workers surveyed said they trust their employers, compared with 72% who trust their personal finance adviser.
Of the women surveyed, less than half (43%) said they are knowledgeable or fairly knowledgeable about financial matters (versus 58% of men). In addition, 67% of women surveyed said they are stressed about their financial situation. Tips for employers to personalize financial-wellness programs for women include: peer-to-peer counseling among women and running financial-wellness workshops from women advisers from outside of the company.
“There’s no one-size-fits-all approach for employers to help their employees,” Kennedy said. “It’s important to tailor wellness programs to each company’s workforce to drive productivity and engagement, not to mention general health overall.”