Some of you might have heard about financial literacy when discussing financial planning, but do you really know what it is? According to Investopedia, financial literacy is the knowledge or ability to understand and effectively use various financial skills, including financial planning, budgeting, saving, and investing.
A lack of understanding of financial literacy and the basics of personal finance lead people to make poor financial decisions, including trap in predatory loans, poor spending decisions, and not having a retirement plan. In contrast, financially literate people have a better understanding of how money works and how to handle it responsibly.
Indonesian and Bangladesh Financial Literacy Rates
S&P Global Financial Literacy Survey in 2014 researched 150.000 representatives across 140 countries by asking them questions about financial literacy that measure the four major concepts for financial decision-making like basic numeracy, compound interest,
inflation, and risk diversification. It is revealed that average Asian countries' financial literacy rates are 33%. Southeast Asia and South Asia are considered low compared to other Asian countries.
Financial literacy in Asia reports by the University of Rhode Island revealed that the main problems of low financial literacy rates in Indonesia are because its people have low reading habits and have education gaps across the country. Meanwhile, Bangladesh has low financial literacy rates because of a lack of well-designed and executed financial education on a national level.
The Importance of Financial Literacy for Worker
Good financial literacy has many benefits for each individual, from achieving long-term financial goals like retirement plans to making better financial decisions by making financial planning and budgeting. The earlier you learn about financial literacy, the better off you will be because education is the key to success when it comes to money.
Not only beneficial for individuals, but financial literacy is also vital for workers and employers.Global Financial Literacy Excellence Center(GFLEC) study in 2020 revealed that employees with poor financial literacy could spend six hours during a workday per week thinking about problems or stress related to personal finances. Employers can tackle this issue by providing financial wellness programs consisting of financial education, access to a free financial planner, and financial tools.
Wagely Role in Improving Worker Financial Literacy in Indonesia and Bangladesh
In line with our mission, we are here to bring financial wellness to Indonesian and Bangladesh workers by providing access to financial services that go hand-in-hand with financial education to make better financial decisions. Besides giving employees access to their already earned but unpaid wages, our application also provides financial education to improve workers' financial literacy. There are three main financial topics in the education section of our app such as smart savings to improve workers' saving habits, overcoming debt to help workers escape the debt cycle, and healthy spending to manage their expenses better.
We also create social media content that is specifically designed to promote healthy financial habits for workers. Last but not least, we hold a webinar for HR to create awareness about the importance of workers' benefits and how it benefits the organization. By providing desired workers' benefits, they can feel valued and engaged. In the long run, engaged employees are proven to have high performance at work and loyalty to their company.
Those are the information that you need to know about financial literacy. Providing your worker with financial literacy education will help them gain better control over their finances. In the long run, employers benefit from workers with less stress, more productivity, and more engaged.