Mercer says financial literacy does not mean financial wellness
When it comes to knowing about finances most Canadians are doing well, so how come they are lagging on taking action?
A new study released by Mercer quizzed more than 1,500 employees across Canada about their financial attitudes, preferences and behaviours and the findings are revealing.
Financial literacy is good, with 51% saying they are knowledgeable about financial matters; but 70% said they would struggle with a financial shock (such as 3 months out of work).
Almost 4 in 10 said their monthly loan repayments are more than their take-home pay and 51% said they are stressed by financial matters.
“Something we see time and time again is financial literacy doesn’t translate into financial wellness,” says 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.”
The survey revealed that 47% of women consider themselves financial literate compared to 58% of men. Two thirds of women are stressed by financial matters.
Most workers trust FAs over employers
The survey’s findings suggest that 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.
Just 40% of workers surveyed say they trust their employers, compared with 72% who trust their personal finance advisor.
This could be an opportunity for financial advisors to partner with employers to drive employee programs.
Four key financial wellness questions
Mercer says that there are some key questions to determine 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?
