What employers can do to spark more money talk in client families
While calls for greater financial literacy among Canadians have revolved around educational efforts, in-class training, and the classic hallmarks of formal schooling, RBC is emphasizing the myriad informal ways we all learn. In their efforts for financial literacy month, RBC Wealth Management has emphasized the importance of the family as a forum for financial education. If parents and grandparents fold a daily dose of financial education into the time they spend with their kids, they could make a meaningful difference in Canadians’ financial literacy.
Stephanie Dean, manager, financial literacy at RBC Wealth Management, spoke about why her focus this November have been on how families talk about money. She spoke to why there are often gaps in family conversations and highlighted some of the steps employers can take to open and facilitate family financial education.
“Learning is constructed, it’s built piece by piece over time as young people interact with the world and reflect on their experiences. So starting when kids are small, whether it’s at the grocery store or doing holiday shopping, being able to explain how you’re buying something and why you’re doing it that way,” Dean says. “Tying some things together, like explaining why the hydro bill is higher in the winter. There are natural events in everyday life where we just need to pause and think to add in the technicalities and to share how we think and feel about it.”
While those small explainers can be very helpful, there is always the ‘why’ challenge that comes with explaining things, especially to young kids. They might ask why you’re using your credit card for a purchase, and you’ll answer that you’re building credit and earning points. They might keep asking why to those underlying reasons in a way that ends up forcing you to admit what you don’t know. Dean says that it’s important to keep information age appropriate and slowly add layers of complexity over time, helping kids to gradually build a meaningful understanding of finances.
The risk, Dean says, of not teaching kids these pieces of financial knowledge is that they’ll learn things the hard way when they become more independent. Sometimes those missteps can be a learning opportunity, but Dean believes a stronger foundation of knowledge can help protect against the worst consequences.
Employers have a key and growing role in these family discussions, too, explains Dean. She notes that more Canadians have begun looking to their employers for insights and benefits that speak to their financial wellbeing. This offers employers and plan sponsors an opportunity to educate. That could even mean on payday employees get a more detailed breakdown of their paycheques and what each line item means. For older employees, there could be a greater discussion about pension plans and deductions that can help build a base of understanding. As employers build out more comprehensive and robust financial education tools for their employees, they could work towards extending them out to employees’ families, allowing spouses and children to access tools and resources.
Dean is aware of the constraints on employer resources here. She thinks, though, that scalable educational tools are out there that can be used. Bringing in outside consultants and spokespeople through benefits plan providers may be a way for an employer to extend some educational benefits without incurring an undue cost in time or money to themselves. Moreover, while the employer is not directly responsible to the employee’s family, Dean believes that by using their position as a trusted influence in an employee’s life, employers can encourage these family interactions about money and create a positive feedback loop of greater productivity and loyalty.
“It's critical that we are all working together to help young people pick up the knowledge and the skills, so that they have the confidence to make decisions that are in their best interest,” Dean says. “I think we want Canadians to grow into adults who are responsible can look after themselves financially… We all can work together, it takes a village. Where we have opportunities to help people do better and be better, I think that it behooves us to do that in the long run, so that our next generation is self-sufficient.”
