Why Employees and Employers Must Invest in Personal Financial Planning Skills
The employment terrain in the last 20 or so years have been marked by changes like divestiture or privatisation (government pulling out of the business of managing businesses); retrenchment or downsizing and early retirement. Employers have also moved to consolidate pay so that instead of multiple allowances the employee gets a consolidated pay. Some stronger organisations still continue to provide health allowance, but usually in the form of health insurance. By taking up the insurance premium the employer gets a more definite cost for the health of its staff and passes the uncertainty on to the insurance provider. While employers have gradually (in some cases) drastically moved away from looking after the welfare of their staff, the employees have not been prepared for this change.
It is becoming more common for organisations to employ independent contractors who are responsible for all insurance and tax obligations related to their contracts. The message being communicated by the changes is clear, the employer will no longer be party to the micro management of the welfare of its staff. The employee must take charge of his/her personal finances.
Although many people are literate in business or organisational financial planning they are usually totally out of depth when it comes to personal finance. The lack of personal financial skills in employees is usually exhibited through: (a) constant demand for salary advances in order to meet seemingly endless personal financial problems; (b) diminished job loyalty in the attempt to get “better paying” jobs; (c) in some cases unfaithfulness in the handling of organisational assets; (d) loss or lack of focus and productivity as a result of personal financial worries; (e) a poor representation of the employer to the outside world due to poor credit records; (f) total financial disorientation when the job comes to an end whether through mandatory or early retirement.
For most middle and low level employees the employer will no longer provide you with a wide range of allowances possibly including transport, housing, health, education for children and so forth. Instead the employer will provide you with one cheque and leave you with the responsibility of managing financial affairs. Even the employees at the higher executive level who may have a comfortable life while still on the job get financially disoriented once the job comes to an end. Gordon Wavamunno a successful business man in Uganda tells a story about a friend who worked in a senior government job and was in charge of procurement for his department. The man was fine as long as the job lasted but had not saved or invested for the time when he became jobless or retired. When the gentleman was retired he did not even have a place to put his household belonging, he called up Gordon to assist him with temporary accommodation for his family and property.
It is for the mutual benefit of both the employer and the employee that they invest in improving the personal financial skills of their staff. Financial planning is the process of solving financial problems and achieving financial goals by developing and implementing a personalized "game plan." The starting point is to address the attitudes and mentality that result in bad personal financial habits.
Does the individual work on a budget or they buy on impulse and spend more than what they earn? Does the individual have personal financial goals or move on day after day without a clear idea of where they want to be financially. It is the lack of clear financial goals and plans that create the sense of almost a near “Katrina” or “Tsunami” when deadlines for school fees, rent or retirement approaches. There is always that distinct sense of unprepared ness and “financial impotence” if you are living without a personal financial plan.
When an organisation invests in improving the personal financial skills and knowledge of its staff it will eventually translate to a better bottom line. Think of it who does not want to have employees or are focused at their jobs and not running around looking for money to make ends meet; the human resource department will be freed from handling numerous requests for salary advances and will instead focus on activities that result in better productivity; staff that have access to the organisations assets will be less tempted to misuse such assets in order to amass quick wealth. The list of benefits goes on without end.
It is becoming more common for organisations to employ independent contractors who are responsible for all insurance and tax obligations related to their contracts. The message being communicated by the changes is clear, the employer will no longer be party to the micro management of the welfare of its staff. The employee must take charge of his/her personal finances.
Although many people are literate in business or organisational financial planning they are usually totally out of depth when it comes to personal finance. The lack of personal financial skills in employees is usually exhibited through: (a) constant demand for salary advances in order to meet seemingly endless personal financial problems; (b) diminished job loyalty in the attempt to get “better paying” jobs; (c) in some cases unfaithfulness in the handling of organisational assets; (d) loss or lack of focus and productivity as a result of personal financial worries; (e) a poor representation of the employer to the outside world due to poor credit records; (f) total financial disorientation when the job comes to an end whether through mandatory or early retirement.
For most middle and low level employees the employer will no longer provide you with a wide range of allowances possibly including transport, housing, health, education for children and so forth. Instead the employer will provide you with one cheque and leave you with the responsibility of managing financial affairs. Even the employees at the higher executive level who may have a comfortable life while still on the job get financially disoriented once the job comes to an end. Gordon Wavamunno a successful business man in Uganda tells a story about a friend who worked in a senior government job and was in charge of procurement for his department. The man was fine as long as the job lasted but had not saved or invested for the time when he became jobless or retired. When the gentleman was retired he did not even have a place to put his household belonging, he called up Gordon to assist him with temporary accommodation for his family and property.
It is for the mutual benefit of both the employer and the employee that they invest in improving the personal financial skills of their staff. Financial planning is the process of solving financial problems and achieving financial goals by developing and implementing a personalized "game plan." The starting point is to address the attitudes and mentality that result in bad personal financial habits.
Does the individual work on a budget or they buy on impulse and spend more than what they earn? Does the individual have personal financial goals or move on day after day without a clear idea of where they want to be financially. It is the lack of clear financial goals and plans that create the sense of almost a near “Katrina” or “Tsunami” when deadlines for school fees, rent or retirement approaches. There is always that distinct sense of unprepared ness and “financial impotence” if you are living without a personal financial plan.
When an organisation invests in improving the personal financial skills and knowledge of its staff it will eventually translate to a better bottom line. Think of it who does not want to have employees or are focused at their jobs and not running around looking for money to make ends meet; the human resource department will be freed from handling numerous requests for salary advances and will instead focus on activities that result in better productivity; staff that have access to the organisations assets will be less tempted to misuse such assets in order to amass quick wealth. The list of benefits goes on without end.
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