The global pandemic has wreaked havoc on the economy. Loss of jobs and disruption in the workplace has created uncertainty leading to financial insecurity. According to the ‘Consumer Spending Sentiment Index Report,’ 90% of Indians are changing their spending behavior. More than 70% are interested in securing their future with increased savings and investments but proper education and resources to plan for financial security are tough to navigate
The Gen Z population (born between 1996 and 2012) is actively entering the workforce with a different mindset on personal finance. The rising costs of living have led them to not only be receptive to financial benefits but also actively demand them from their employers. The human resources industry has turned its attention to the needs of these younger employees.
Inculcate Financial Literacy
The cost of living has increased manifold and everyone constantly stresses about effectively managing expenses. Despite the increase in the use of fintech products, only 27% of India’s population is financially literate, according to SEBI reports. It can be especially challenging for young employees to take care of their expenses with a limited income and lack of financial education. Gen Z’s a techno-savvy generation and is keen on using mobile payments and fintech products daily but using financial products regularly doesn't make them financially literate. To make the right financial decisions, financial education is a must today.
Today employers should take the initiative to bridge the literacy gap and improve their employees’ understanding of finance to help them get on top of their expenses
Encourage New Financial Products With A Proper Understanding
In India, more than 50% of the population is below 25 years of age. While young adults seldom have any difficulty navigating sophisticated financial apps, their understanding of products and the market is half-baked. There has been a steady influx of lucrative financial products but they have their own set of risks that anyone investing should be aware of:-
Cryptocurrency - Crypto attracts young investors, but the market is highly unregulated. Price volatility and sophisticated scammers can easily lead to huge financial losses.
Share trading- Share trading is now seen as a get-rich-quick scheme with thousands of trading apps. Young people with access to money can easily lose self-control and become reckless while trading stocks.
Fintech Apps- Fintech innovation results in many new financial products, but young people who have just started earning should understand the risks behind these products. Otherwise, they may become vulnerable and lose their earnings because of bad financial choices.
Staying Away From Fraud
Gen Z’s are digital natives and it’s only natural for them to have access to everything at the touch of a button. Although that has it’s own set of merits, it exposes them to a dangerous side of the internet.
More than 52% of the Gen Z population is keen on becoming financially smart and although having access to financial products on their phones can seem to be a boon to Gen Z, their impulsive nature to get ‘rich quick’ can make them an easy pray to scammers
The right financial education can help the younger generation stay away from fraud and be better decision-makers.
Identifying Misleading Advice
Only 11% of the Gen Z population has an excellent knowledge of finance- While that’s a huge number in itself, it’s not enough! More than 40% of Indians still lack basic knowledge of different financial product offerings like pension funds, bonds, and debentures that let them invest toward a better future.
Meanwhile, there has been a huge influx of ‘so-called’ social media influencers that are providing incorrect financial advice. Following these influencers, the younger generation tends to invest in fad financial products that then turn out to be huge losses. This is where financial literacy plays a huge role- Gen Z needs to be empowered to make their own financial decisions.
How Can Employers Provide Financial Literacy?
Educating young employees on financial wellness will benefit companies in many ways. Helping your employees financially educate themselves not just helps them better manage their expenses but also plan for a better future. Having control of finances will inevitably reduce their stress which leads to productivity, satisfaction, and happiness at the workplace.
Employers can deploy financial education through online webinars and apps. One-on-one financial mentoring from trusted industry leaders can help young employees to understand debt management. By empowering young adults with financial literacy, employers can also ensure that they can manage their finances effectively in the future.
Extend employee benefits promoting financial wellness
While education is crucial, access to financial resources and products is vital for employees to take actionable steps toward financial success. The HR department should understand the financial needs of the employees and implement financial programs that help them succeed.
- Instant Cash Loans – Employers can provide access to instant cash loans as a safety net for employees to meet their unplanned financial needs. Batik integrates with an HRMS account to provide one-click cash loans in just 10 minutes.
- Down payment assistance – Enable your employees’ home purchase journey with down payment assistance that covers 20% of the home value. Batik platform automatically checks eligibility to approve such loans.
- Digital investments – Provide a trustworthy platform for digital assets to your employees through Batik. They can plan for retirement, higher education, or future expansion using many investment options with expert advice.
Young adults in the early years of their careers have to deal with increasing expenses that are not proportionate with the wage increase. Only 31% are confident they can explain the working of stock markets to their friends. With the right guidance, they can capitalize on tech savviness to invest in new products. Companies should focus on ensuring the financial well-being of young workers to help them manage their finances better.
Batik is an employee benefits and perks platform that helps employers take financial education to the next level for their employees. Employers can customize their employee benefits and perks offering to provide them the financial education that suits their needs seamlessly.