Fred Flintstone said that every buck is your friend, and the more bucks you got, the more friends you got. Fred was not a rich man, but he understood the concept of financial literacy. Bedrock style.
We are all taught to read at a young age. We start with letters, and learn the alphabet. Then we learn about words, sentences and paragraphs. Soon, we are reading Pat the Bunny, Where the Wild Things are and Green Eggs and Ham.
When we were little, mom and dad read books to us, and showed the pictures so the words had context and meaning. My favorite book was Goodnight Moon. I still love reading this one to my kids. The problem is they are both teenagers now and don’t want to hear about the two little kittens and the pair of mittens.
What is financial literacy?
The ability to read and write is literacy. We’ve all got this one down. The ability to understand how money works is financial literacy. This one is a little trickier. I’m guessing that mom or dad never read you books about money management or financial training when you were younger.
According to a recent Gallup Poll, only 57% of Americans were able to pass a simple five-question financial literacy test. Can it be true that only half of Americans understand how money works? If you’ve seen our national debt, you know the answer is yes.
Financial literacy is the ability to understand how money works. It is perhaps the most important business skill you can learn. Moreover, it’s the most important business skill you can teach your employees.
Why is financial literacy important?
When you become financially literate, you can read and understand the financial statements of your company. You gain insights into the operating results that you didn’t have before. Think of it like x-ray vision to see through the lame excuses of why sales are down or the gross margins are shrinking. Financial literacy opens your eyes to what is really going on in your company and gives you super powers to see beyond numbers, right down to the root cause of problems.
Why you must teach Financial Literacy to your employees
Financial literacy isn’t just for owners and executives, it’s for all your employees. Teaching financial literacy creates a culture of business people – employees who understand how money works, how business works, and how to dramatically improve financial results. In short, teaching employees to become financially literate will transform your company.
People want to know that they make a difference in their job. Employees give a tremendous amount of their time, energy and passion to the business and they want to know that it is for a purpose. In a nutshell, they want to know that they are doing meaningful work.
Financial literacy teaches employees how they fit into the organization and how they make a difference. It draws a bright line between the work the employee does and the result that is achieved. Financial literacy gives the employee the ability to see the results of their efforts, and teaches them the importance of their contribution. Financial literacy quantifies the meaningful work.