Why financial literacy should be of paramount importance, especially among women

Despite the increasing participation of women in the formal labour sector, there is an overwhelming need to power them towards financial wellness through focused initiatives. Anisha Dossa, co-founder of employee benefit start-up Jify, throws light on the opportunity

With the United Nations adopting the 2030 Agenda for Sustainable Development in September 2015, there were 17 Sustainable Development Goals that came into force on 1 January 2016, marking the beginning of a global collective effort to fight inequalities, end poverty and build a sustainable future for citizens across the globe. As part of these goals adopted by world leaders, ending poverty, hunger, gender inequality and providing for good health remain the top priority. As a key enabler to reduce deprivation and boost well-being, the World Bank Group has identified financial inclusion as the main focus of the group’s Universal Financial Access 2020 initiative, which states that all adults must have access to a bank account to store, remit and receive money as the basic step towards helping them achieve financial independence. However, despite these efforts, there is still a considerable gap along with gender disparity in the access and usage of financial inclusivity services.

The need for financial literacy among women

Echoing the broader trend in developed countries like the United States, the Reserve Bank of India’s (RBI) assessment on financial inclusion in the country outlines that even in urban areas, only 67.8 per cent of the adult population avail banking services. While the country’s geographic spread remains a key challenge to ensuring that bank branches are within easy access of citizens, there is a clear need to employ digital banking means to ensure financial access to all. Additionally, the focus on financial literacy is of paramount importance, especially amongst women. This is primarily down to the fact that even in the formal employment sector, women tend to either ignore financial planning or leave it to their spouses or family members. With women comprising ~20 per cent of the country’s formal workforce, it is thus imperative to build awareness and provide financial inclusivity services that cater to their nuanced requirements.

Amongst these services, ensuring earned wage access (EWA) is the most important tool to motivate women at the workplace to better manage their financial expenses and work towards securing themselves. These services enable employees to access their accrued but unpaid salary anytime during a month. This not only helps in providing additional liquidity, but also is vital to manage exigencies without resorting to borrowing money from loan sharks or the informal lending sector. In fact, over 70 per cent of the Indian workforce continues to live paycheck-to-paycheck and are burdened with high-interest charges when they resort to emergency credit or payday loans. This eventually impacts their ability to save money for the future and ensures that they remain ensnared in a vicious debt cycle. While these figures are for the general Indian workforce, the numbers are far worse for women employees and demand a concerted effort to reverse this trend.

In comparison, EWA services come with zero costs or risks and can provide timely financial support when the need arises. Moreover, apart from saving on inordinate interest costs associated with such unregulated credit providers, the visibility provided by EWA services can inspire them to further plan their savings and build a corpus. An added benefit of availing EWA services is that it comes with money management tools and tips that can go a long way in helping women employees to achieve financial security. With facilities like pre-paid cards for withdrawals and instant payments and rewards on merchant transactions, these EWA services can instil positive spending and saving habits, essential to achieve high levels of financial literacy amongst women employees.

Adopting Earned Wage Access (EWA) is a plus

While the idea of EWA is still a new idea in India today, corporates are increasingly including these services in order to protect their employees from venturing out into the informal lending sector for their financial needs. EWA services also help to reduce the effort expended on processing advance payments or loans and can be neatly integrated into existing HRMS or Payroll systems employed by corporates today. In fact, even MSMEs and new-age start-ups are warming up to this concept, eventually helping lakhs of women and men to gain financial access and manage their expenses effectively. Just like how group medical insurance or providing gratuity benefits is the norm for organisations today, providing EWA services can be a great boon for the entire Indian workforce, especially women. Needless to say, the time is ripe for organisations to adopt such EWA services and help their employees in securing their future and even achieving better mental health at the workplace.

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