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Can Millennial Stress be Resolved by Financial Wellness?

Stress is an issue bigger than ever for millennials, who are rushing ahead with their worklife, finding little time to enjoy the intricacies of life. They are not only toiling themselves with projects, preparing reports and meeting targets, but also when off the work they busy themselves worrying about their debt, savings and expenditure.  India has been, off late, a very volatile economy with companies shutting down production and filtering out chunks of employees. As such millennials are forcing themselves to work in return for poorly paid salaries and unsatisfactory job environments. In most of the cases, they are not able to manage their day-to-day expenses and have to revert to debt; while in other cases are confused about their financial course.

A whopping 76% of Millennials say they are experiencing financial stress, up 23 percentage points from 2018, according to the PwC 2019 Employee Financial Wellness Survey.

Financial stress is the top contributor in affecting employee health and morale followed by their jobs and relationships. Matching your salary with your expenses is only the tip of the iceberg, when cash flow and debt issues add to the worries. Employees are worried that they are not able to save enough and will face or are facing a financial crunch. Let’s look at the major issues hounding today’s millennials in terms of finance:

Past concerns  

With higher education becoming more expensive each year, an increasing number of new employees enter the corporate sector already laden with the burden of huge debt in the form of education loans or personal loans. As per Workplace benefits report 2017, 40% of millennials say that they left high school and college unprepared for the real world. As such they look upon their employers for the necessary guidance and help related to a majority of topics around financial wellness. 18% of millennials want more help with their student loans.

In some cases, these debts may be gifted down from one generation to another. A son may have to pay off a home loan or some other debt incurred by his father. These circumstances dilute the finances and millennials find it difficult to lay away the stress.

Present concerns

According to the 2017 Workplace Benefits Report, a significant number of Millennials say they feel unprepared to manage their finances and need help with topics across the financial wellness spectrum, including saving for retirement (43 percent), general savings help (40 percent), paying down or managing debt (34 percent), saving for major expenses (36 percent) and budgeting (31 percent). 

Peer pressure, maintaining the status quo and lavish lifestyles often lead millennials to the brink of a financial crisis if they do not plan their finances well in advance. Many are highly ignorant about how to proceed with investments; banks or mutual funds, long term or short term, commodity or shares, and a lot more. About 43% feel that they require more help with investing, 40% wanting more information on how to save taxes and 21% feel that they want to save more. It’s an additional issue when they require funds in a lump sum for unforeseen expenditure or a major purchase. They either trap themselves in instalments or else fall in a debt trap. 63% of Millennials consistently carry balances on their credit cards and two out of five have trouble making minimum monthly credit card payments.

Future Concerns

Besides provident fund schemes, gratuity and a few other benefits, employees aren’t assured adequately about their future. They remain concerned about their retirement and pension, their children’s education, medical expenses and a lot more. Pension schemes are offered by insurance firms, but which one is best suited remains a matter of concern. Career opportunities and growth also impact future and present decision making. Not surprising then that employees, especially millennials, find themselves to be dependent on their employers.

Why should employers take up financial wellness programmes?

Financial stress not only impacts an employee on a personal level, but his working capabilities and mental faculties get impacted too. Stress can be behind severe health concerns that may lead to employee absenteeism, employee turnover, and dissatisfaction. The issue of financial health becomes of utmost importance to keep the solubility of the firm intact on one hand and to achieve common organisational goals on the other. As per a survey, an employee spends 12 hours on an average each month stressing about their finances. 

Bank of America Merrill Lynch report says that the lack of confidence in financial matters affects Millennials’ workplace behavior. On average, employees spend 3 work hours each week (12 hours per month) dealing with financial stressors.

A well thought of and structured wellness programme may act as a tonic for the employees’ financial health:

#1 Making an in depth study of employee concerns before finalising on the mode the financial programme is critical. Not everyone shares the same crisis, and not everyone will desire third party approvals or advice before taking decisions. A financial assessment is essential before you initiate the program and want it to succeed. This can be an eyeopener for those employees who may have been unaware of the causes of their financial stress and will make them ready to adopt the new financial course.

#2 Educating employees about financial health and other resources should be taken care of as well. This can be one through seminars, online courses, or even lectures and classes conducted by an expert or professional.

#3 The employees must be educated on healthcare costs as well. It doesn’t hurt to take this opportunity to promote healthier lifestyles as well. This can save them a lot in the long run. Group insurance schemes and health insurance schemes should be encouraged as a norm in the organisation.

#4 Financial debt management, especially the management of student loans, is another area of focus. Employers, if possible, could even consider taking it upon themselves to sort out the education loan or debt of the employees as a gesture of goodwill. This can be offered as an employee benefit as well. Executed right, the company can go a long way in earning the reputation of being the best in class when it comes to their employees’ welfare.

#5 Then comes the basic question of managing the current expenses such as installments, deductibles, premiums and other expenses. There are several paradigms involved in financial planning and it can be overwhelming for a millennial who has just been placed on his job.

Encouraging employees to take part in these programmes and letting them get involved through participation, and one on one discussion will assist them in reducing their financial stress. The overall focus of the employee can shift to organisational task boosting his productivity and overall efficiency. At the individual level, it will boost their confidence to manage their current expenses and plan for their future expenses in advance. Financial wellness programmes can, therefore, help in improving employee health and quality of life. A healthy and financially sound human resource can be an unending source of profitability and efficiency for any enterprise.

Artificial Intelligence In Hiring: Is Bias A Major Concern?

Artificial Intelligence has rapidly moving from a concept on paper to a legitimate technique with applications across domains. The tech world was talking about AI for a while now, but now, the other industries are abuzz with it, too. The use of AI is slowly becoming normalised; something to be expected, even. This is especially true in the corporate world when it comes to recruiting. Employers are now turning to AI-driven tools to help with recruitment in the initial stages. Companies like Amazon, Ikea, Target and PepsiCo have already tested or used algorithms to decide who fits the bill for an interview call, and the list is only growing. 

Advocates claim several advantages to the use of AI in hiring. Among them, the major ones are that it can reduce the workload of HR managers, and also that it would reduce, or even potentially eliminate, human bias in the early stages of recruitment. Critics, however, warn that these tools would be no less biased than the people who train them. Let’s take a closer look:

Cases of bias

Backing the critics’ argument is the real example of Amazon’s gender-biased AI recruitment tool. In 2015, the company had to scrap its AI-based recruitment system after finding out that it was showing bias against women. The tool was trained to scan incoming resumes and select candidates with the most promising profiles for upcoming rounds. It was trained using resumes of candidates over a 10-year period. Most of the applicants in this period had been men, thus increasing their probability of getting hired over women. As a result, the recruitment tool began downgrading resumes which included keywords such as “women’s club”, and also those who went to women’s colleges. To Amazon’s credit, the tool never made it past the testing stage.

The sad part is that this was not a one-off situation. In 2016, Microsoft faced a similar problem with an AI chatbot developed to interact with Twitter users to learn and “get smart”. However, AI tools learn from the inputs they are given. So the chatbot learnt profanity, race-based stereotyping and inappropriate language from the users, which it then began to use. 

Why Does This Happen?

The problem with AI at its current stage of evolution is that it largely requires training using data. If the data fed to the system is biased, it would generate bias in the system itself. An apt example is the gender bias in the tech industry. Although an increasing number of women are rising in the sector, it still remains largely male-dominated. So, like with Amazon, if the AI hiring tool uses data in which the candidates are predominantly male, it is highly likely to show gender bias. This applies to racial bias as well. 

Another problem is that targeted advertisements for jobs also tend to be biased. If the job posting doesn’t reach the right candidates in the first place, future biases in recruitment would persist. Additionally, job descriptions themselves are often gender-biased. If a job sounds too “macho”, women are unlikely to apply. 

Is AI Bias A Major Concern?

As AI continues to witness increasing adoption and popularity in recruitment, bias is potentially a concern. However, the use of AI has some inherent traits that eliminate biases, at least to some extent. The most important one is that AI-based tools are simply efficient. Consider the task of scanning through all the applications an organisation receives. This task will certainly be performed faster and more efficiently than the current hasty and often biased screening techniques human employers use. According to an article in Harvard Business Review, companies get more than 250 applicants for a single open role. Manually handling every single application is simply not practical, so recruiters currently review only 10-20% of the applications, based on their colleges, employee referral programs, etc. However, this screening method drastically reduces the diversity of the candidates. Using AI, this problem can be eliminated, and all the candidates’ applications would at least be scanned. 

Of course, the fact that the applications are scanned wouldn’t matter at all if the system is biased. However, this can be remedied, too. One way to approach this is to control the data that the program uses. It may be set to exclude data about gender, ethnicity and other irrelevant information that could lead to bias. Such a step may have, to some extent, at the very least, eliminated problems similar to the one Amazon faced. 

The bottom line is that although AI in hiring can be just as biased as the humans who program it, it’s still possible to identify and correct bias in AI, unlike in humans. If conscious steps are taken to ensure that the AI recruitment tools used are not biased, it could potentially eliminate bias in the initial stages of recruiting.

The Relationship Between Financial Wellness And Team Morale

Money, or the lack of it, is a major cause of stress in adults. Often, when working adults are facing financial issues, the resulting stress and anxiety can follow them to their workplace. Unsurprisingly, these stressed employees are unable to deliver to their full potential.

If we ask about what is considered the ideal state of financial wellness, It shouldn’t be very surprising if different employees have different opinions. For some employees, financial stability means the ability to pay all their bills and be prepared for unexpected events that may require monetary effort. However, some employees expect more when they think about a strong financial state. But one thing remains very clear whether employers take note of it or not – financial wellness programs are desired by all employees, along with other job benefits

The Link Between Financial Wellness and Employee Morale

We don’t need extensive research to determine how morale can affect a professional’s working efficiency. Being able to give our best when our interests align is human nature. With this in mind, HRs have been tirelessly working to keep the team morale high even in challenging situations. However, ever-increasing financial worries among employees makes task an uphill battle.

Now, more than ever, employees find themselves struggling to navigate through their financial problems, and resulting stress and pressure starts to negatively reflect in their workplace performance. Although the issue seems to be largely affecting employees, it has serious repercussions for employers as well. 

Lack of financial stability can mount significant pressure on employees. If employees are under stress or pressure, they are likely to waste their work hours thinking about their financial issues. Furthermore, stressed employees tend to have lower morale that can result in their diminished productivity or even absenteeism. This can subsequently lead to a financial loss for employers due to unachieved goals. Therefore, keeping employees motivated and stress-free is very much in the interest of both employers and employees.

Numerous sources of research have provided compelling evidence that a lack of financial stability is the most common issue plaguing employees across every industry. As per a survey report by PwC, a large part of the workforce is facing challenges with managing their financial liabilities. Due to rising unemployment and living costs, employees perceive that the compensation they get from their employer is not enough to sustain their financial needs. This, in return, has become the root cause for most of their worries. The survey further highlights:

  • About 50% of the employees who participated in the survey cited financial matters as the primary cause of stress than any other issue.
  • 49% of the employees are struggling to pay for day-to-day expenses with their current compensation.
  • Nearly 57% of the employees are interested in making their own financial decisions if they are given proper guidance.

Employers are not completely aware of the need for employee financial wellbeing programs in their workplace. A large number of organisations can be seen running some great financial wellness programs for their employees. While the primary goal of these programs is largely to provide the proper aid to employees through various means and making them able to improve their financial soundness, these programs can also play a significant role as part of an employee retention strategy.

Conclusion

PwC’s survey, with several others, projects a very clear picture of the significance of financial wellbeing. These provide a decent opportunity for employers to assess if they need to take the necessary steps to ensure that their employees are financially secured. Employers need to recognise that prioritising employee financial wellness will go a long way, generating value through stress-free and motivated employees utilising their full potential.

A warning on getting too friendly with CREDIT CARDS

A warning on getting too friendly with credit cards would find itself in nearly all financial advice. And with good reason – considering the high interest rates and late payment penalties many cards can have. The dangers of running yourself into a credit rut, with considerably more debt than you have the capacity to repay in one go, are too easy to fall into. Unchecked spending with credit cards in-turn leads to a big hit to your credit scores if you’re unable to make the monthly payments on time.

Credit cards, used prudently, are an efficient way to elevate your credit score, and optimise your payments. It would be unwise to assume you would never need a credit card in this day and age; anything from a sudden hospitalization to paying bills, to a little splurge on gifts for yourself or others, a form of cashless payment is indispensable these days. Here are 5 strategies you can use to ensure your credit card repayments don’t get the better of your financial wellbeing:

5 Strategies to pay off your credit card debt faster

1. Pay off previous dues before using your card again

This may seem obvious, but stave off on using your credit cards until you’ve repaid most of the existing dues on them. If you keep racking up credit card debt while still keeping up with current repayments, all you’ll be doing is increasing your minimum monthly payments, and making it challenging to meet them in consequent months. Try to hold off on expenditures using your card until you’ve paid off a decent amount, or ideally all of it. This will keep your minimum monthly payments lower, and make it easier for you to stay ahead of them.

2. Budget your spending to account for repayments

Once you have a significant amount of credit card dues, it’s wise to figure that into your monthly budget planning. If you don’t, you may find yourself spending money on frivolous expenses, and end up not being able to meet the minimum monthly payment on the card. This could lead to exorbitant fines for late payment and a hit to your credit score.

3. Pay off higher interest cards first

If you have multiple credit cards, it’s financially wiser to focus on paying off the one with the highest interest rate first. While the difference may seem small if you compare interest rates across your cards, mathematically speaking, you’ll still save more on paying interest if you repay high interest-rate debts first over lower-rate ones. Try to repay more than the minimum repayment amount on these cards each month to reduce them. Focus on your lower interest-rate credit cards post this.

4. Pay more than the minimum monthly repayments

As long as you budget your repayments into your monthly expenditures, and keep a close track of your credit card expenses, you should have little trouble meeting the minimum monthly repayments required to avoid penalties. However, doing the bare minimum means that your repayments stretch for an unnecessarily long period. This means you pay a huge chunk of money just for interest payments. Pay as much as you can above the minimum amount, so that you spend less on interest payments, and are able to pay off your dues faster. 

5. Get a low interest debt-consolidation loan

If you have a lot of high-interest credit cards on your neck, it’s wise to opt for another debt-consolidation loan. This may seem counterintuitive at first; Why would you go into more debt to pay off existing debt? But, if you’re able to acquire a loan that has a significantly lower interest rate than your credit card payments, you actually end up spending significantly less overall. You can use the debt-consolidation loan to repay your credit card dues instantly, and the lower interest rates mean you spend less on interest payments. Quite a few online instant loan portals, for instance EarlySalary, provide low-interest rate loans, with lower requirements on CIBIL scores than banks and other standard financial institutions.

While credit card spends are inevitable, getting burdened with repayments doesn’t have to be intimidating and stressful. With some financial management and strategic budgeting efforts, you can be confident of staying on top of your repayments, and ensure you make the most of your credit cards.

How To Deal With “Lend Me” Friends

Mario Puzo once said that friendship and money are like oil and water. This can sound like an unusual take, and would certainly not be true in all cases, but having ‘lend me’ friends can have disastrous consequences. These may range from never seeing your friend again and burning relationships, or never getting your money back, or worse – both. This works either ways, whether you are the one borrowing or the one lending it.

At some point or the other in your life, you must have encountered a friend or a family member who has lent you or to whom you have lent money. As a rule, it is good to set some boundaries. Lending is not always a bad idea. After all, sometimes it is also a good way to put the money you can spare to use. However, always evaluate options before opening your purse strings or holding out your hand. Remember, replacing money is easier than replacing a worthy relationship with a friend or family member. So if you’re dealing with Lend Me friends, perhaps look at dealing with them in these ways:

#1 Learn Diplomacy

Reacting emotionally or with sentiment while you decline to lend money will only strain your relationships further. If you can gently, yet firmly, explain that you do not lend money as a matter of personal policy, regardless of the person, the conversation can be an easier one to have. While there may be pressure from the other end, explaining that you are not open to changing your principle may be an effective counter to requests for money, without harming the relationship.

#2 Offer Alternate Assistance

You can, to the extent possible, offer to help your friends in non-cash ways. If your friends are running low on cash for groceries, sharing your meals to tide them over could have more impact as a gesture than lending money. If they’re looking to purchase items like smartphones, you could lend them your spare device for a while until they’ve saved enough for a purchase.

#3 Gift, Or Only Lend As Much As You’re Willing To Lose

If you must lend cash, consider giving it away as a gift, with no expectations of repayment. We all wish the best for our friends, and if cash is what they need, we might as well gift it to them. This eliminates the potential for spoilt relationships over small sums of money. In other ways – only lend money that you’re okay with not seeing returned.

#4 Educate Them On Financial Management

This could include helping review their expenses and getting them on a prudent budget. It could also involve suggesting side gigs to earn extra money, or helping them get a raise. Dig deeper into the source of their money crunch and see if there is another way for them to seek assistance.

#5 Direct Them To Instant Loan Apps

With numerous borrowing options available, it’s fairly easy to receive an instant personal loan in today’s times. With portals like EarlySalary, this option comes with unique advantages – borrowers spend it as per their needs, no questions asked, and return it on a flexible repayment schedule. 

With easy applications, quick approvals and disbursals, no collateral, and no relationship at risk, an online personal loan is the best possible way to deal with a cash crunch, and a great recommendation for a Lend Me friend. Here’s a deeper insight into the offerings of a cash loan.

 Rock-Bottom Interest Rates

Interest rates charged on an instant cash loan are fairly competitive. Portals such as EarlySalary offer personal loans at nominal rates. Considering inflation and time value of money, personal loans are the most ideal way to borrow money for less time.  

Minimal Paperwork

App-based cash advances have fewer eligibility requirements as compared to traditional sources. You simply need to upload your identity proof, income proof and address proof. This not only saves you time but also makes this loan much more handy. With EarlySalary, the loan application process barely takes a few minutes. The Loan approval process is backed by algorithms that check the veracity of the borrower and their repayment capacity. This helps in approving loans within 8 to 24 hours of your application on the app. 

Collateral-Free Loan

Personal loans do not need any guarantor or security. This protects the borrower  from the risk of losing their assets in case of nonpayment.

Flexible Repayment options

Personal loans from EarlySalary can be repaid in sets of 3 to 6 easy installments. Borrowers have the freedom to choose the duration of their quick personal loans. They may even repay the entire amount in one go without any extra charges. 
Instant cash loans are an easy credit instrument to access immediate funding. With seamless processing and instant disbursal of the loan amount, personal loans provide liquidity when it’s needed the most. Whether it is a last minute travel plans, shopping list or a medical emergency, an instant loan is a great fit for all your Lend Me friends. Encourage them to get started with EarlySalary here.

Today’s Youth – Broke Millennials or Smart Borrowers?

28 year old Sharan would fit check a lot of boxes on the stereotypical millennial checklist. A penchant for eating out from quality food joints, a habit of catching his favorite matches from the neighbourhood sports pub, and a strong desire to flaunt the latest smartphone or take quarterly vacations – Sharan clearly loves to live life to the fullest, like many others his age. He landed a respectable job at a promising startup right after college, and shares much of his organisation’s aspirations and impatience for growth. 

But again, like many of his peers, this era of instant gratification comes with some side effects. With wages not rising precisely in tandem with living costs, and the significantly larger consumerist sentiment in this generation, millennials seem to carry the highest amounts of debt amongst all generations. A boom in internet adoption, coupled with the consequent easy availability of credit, have only fuelled their ambitions. Whenever Sharan running is short on cash, which happens more often than he’d like, all he does is flip out his smartphone, and a few taps later, he has a loan amount coming to his bank account directly. 

For a generation that prioritises expenses over savings, this is a common occurrence.

What’s The Millennial Financial Story In 2020?

This brings us to an important question – what are the consequences of such an approach to finances? Does this end well? What do they mean for the evolution of the fintech industry, and more importantly – for the millennial generation? Are today’s youth simply broke millennials, or smart borrowers who take advantage of credit to head closer to their goals? 

Source: YouGov-Mint

With a tendency to spend on experiences in the present and live life to the fullest, it may be a reasonable assumption to say millennials are headed deep into debt traps, with little in savings to assist them. With multiple surveys and studies suggest that the youth of today are increasingly skipping large expenses such as homes and cars, their expenses are likely channelled into improving living standards and discretionary purchases. Such a model may not leave room for a monetary safety net, making millennials vulnerable to financial emergencies. Plus, there’s no shortage of instant loan apps, credit cards and other options. Getting quick personal loans is now truly ‘quick’ thanks to instant loan portals, unlike the slightly expedited, but still week-long process at traditional banks. The EMIs are truly low-cost as well, and flexible repayments only add to their appeal. So do millennials borrow more than they are able to repay, ending up with little or no savings?

But perhaps the solution to these worries lies once again in instant access to credit. Instant loan portals, while they may fund short term splurges, also prove critical in times of need. Whether it’s a medical emergency, a last minute shortage in rent payment, or an unforeseen expenses on a friend’s wedding, many millennials are increasingly relying on portals like EarlySalary to tide them through. 

The key to finding yourself on the ‘smart borrower’ side of the spectrum, and not a ‘broke millennial’, lies in deploying wise financial strategies and sticking by them. Credit can be immensely useful if leveraged as a means to goals and objectives, while maintaining control over your spending patterns. Millennials can start by:

#1 Building Financial Literacy

Instead of looking up the random stray financial tip on the internet, or advice from peers, educating yourself broadly on financial management is a more comprehensive and complete approach to building financial stability. Understanding exactly how to budget, optimise savings etc will form the foundation of your financial journey over the long run, enabling you to leverage debt for the right reasons.

#2 Understanding Debt

Debt comes in all forms, and some of them can be better than others. For example, taking an instant cash loan from EarlySalary comes with low interest rates, flexible repayments, and near-instant access. On the other hand, credit card debt can feature prohibitively high interest rates, and even impact your credit score in case of delayed payments. Another category – traditional loans, are neither cheap, nor quick. Someone with excessive credit card debt, therefore, would do well to refinance it by heading to EarlySalary for a personal loan.

#3 Carving Out Clear Financial Goals

A financial plan is a tool, not an end in itself. At the end of the day, it works to serve whatever specific goals you hold dear. Naturally then, it is critical to have clarity on what these goals are, and building a plan that is customised to these ambitions. Whether it’s owning a home by 40, or travelling to your dream destination in the next 5 years, each goal brings with itself unique challenges and debt strategy requirements. 

Other well known smart credit strategies may include following the 50/30/23 rule (50% for needs, 30% for wants, and 20% for savings), steering clear off credit card debt, and more. 

Where do you lie on the millennial financial spectrum? Let us know!

Happiness & Money at Workplace

By: Kuldeep Gupta

About the Author: Kuldeep Gupta is Head of Human Resources at Porteck Corporation, an IIM Lucknow alumni & a master trainer having more than 18 years of experience managing human capital.

About the Author: Kuldeep Gupta is Head of Human Resources at Porteck Corporation, an IIM Lucknow alumni & a master trainer having more than 18 years of experience managing human capital.

When we make decisions about money, how to spend it, what we do to earn it, how we put it aside and grow it for the future, we’re dealing with a lot more than just numbers. Money is woven into the most intimate aspects of our lives. It’s part of who we are, how we take care of ourselves, and how we connect with others. 

Money can also be a physical experience, with certain financial events lighting up our brains like a pinball machine.

We all wish to have the world’s best employer with abundance of in-kind benefits, but, let’s face it, we may not. Dwell on the aspects that we enjoy about work, and avoid negative people and gossip. Find coworkers we like and spend our time with them.

So one has to think positive all the times; but is it so easy?  Can you really achieve this if you did’t manage your financial health?

Let us further discuss this..

Happiness and satisfaction are subjective concepts – while for some of us monetary benefits can be equated with job satisfaction, some might strive for recognition of their hard-work and lose motivation on failing to achieve so.

For some people, having a friendly environment at work is an essential requisite for deriving pleasure. No matter what the standards are, being content with our careers is crucial for maintaining the ‘work-life’ balance.

So what is “Financial Wellness”?

“Financial Wellness involves the process of learning how to successfully manage financial expenses. Money plays a critical role in our lives and not having enough of it impacts health as well as work performance.”

It has been seen many a times when somebody approaches you for financial help; you actually wanted to help but denied due to unforeseen reasons.

Money concerns are one of the biggest causes of stress. PwC’s 2017 ‘Employee financial wellness survey’ found that “53% of employees are stressed about their finances”.

Smart companies are recognizing that being financially stable is an acute need for their workers. In fact, in a recent Barclays survey, “38% of employees said that they would move to a company which puts financial wellbeing as a priority”.

Importantly, the study also found that 1 in 5 employees want financial guidance from their employer.

So what an Employer can really do to support Employees’ financial wellbeing, there are FOUR things mentioned below:


  1. Money Management Advice:

Companies could consider offering money management guidance, debt counseling, and coaching on debt consolidation. If you don’t have the skills in-house to provide this information, there are money management service providers who offer tailored programs aimed at employees.

  • Discount Schemes:

There are a range of loyalty and rewards schemes employers can register with to enable employees to receive discounts on goods and services when they shop online through the scheme.

  • Instant Cash:

Nothing like it; it gives instant gratification to the employee; so that they can work without future concerns for cash need.

  • Loans & Saving Schemes:

A research conducted by the Social Market Foundation and Neyber reveals almost 50% of employees are not putting money aside for anything beyond regular bills. This study also shows that at least 33% of workers have no savings or investments.

Employers find it difficult & impossible to navigate through employees’ budget.

Remember, though, employees value a great workforce experience more than perks – so make sure you’re getting value from support you’re offering in more than the financial sense.

Is Your Workspace Ready For AI-based HR assistants?

Artificial Intelligence has gone from being depicted as a primary character in sci-fi movies, to being a buzzword for quite a while, and finally actually penetrating today’s professional workspaces. It has brought with it a risk of unemployment for 38% of the US workforce (35% in Germany and 30% in the UK) according to PricewaterhouseCoopers. But asssuming its adoption continues without any hiccups, will the incorporation of AI in business be as bad as the popular notion suggests it will be?

Answering that is a little complicated. There is no denying that we are inevitably moving towards a model that relies heavily upon AI to make business tasks easier and more efficient, and we’re already pretty deep down the rabbit hole.

This decade has seen tremendous adoption of AI in active roles with 23% of businesses incorporating Artificial Intelligence. Often, with rising costs of running a business, companies also feel a need to rely on AI to get their work done. As a result, 63% of the companies say that the pressure to reduce expenses will require them to adopt Artificial Intelligence. With support in such magnitude, adoption will only increase further and according to Markets and Markets, it is estimated that AI would have grown into a $190 billion by the end of 2025. IDC also predicts that 75% of all companies will use AI in their apps and software.

AI-based Human Resource assistants have already established their presence in some advanced workplaces around the globe. With an increasing number of organisations opting to use AI assistants in HR, it is only a matter of time before we see them practically everywhere. AI tools will shoulder a considerable number of internal processes at a workplace, and make them quick, and streamlined for efficiency. 

So, is your workspace ready for what’s coming? Artificial Intelligence is being adopted with some reluctance due to some of the issues discussed above, but it can also certainly assist employees and the company itself in the long run. Let’s take a deeper dive and figure if your workplace is ready for the revolution:

#1 Artificial Intelligence assistants can help enhance productivity

Delegating tasks that require no human input and are mundane could prove to be very effective in moving manual focus to more quality work. Employees could use this to an advantage and essentially get more work done, increase overall performance.

AI can transform the administrative work that is carried out by employees today. It will, in all likelihood, do most of the heavy lifting by taking care of the daily grunt work that comes with Human Resources. The task of maintaining data that HR currently majorly focusses on  will all be seamlessly handled by the AI assistant. Artificial Intelligence will soon revolutionise data analytics. With the enormous amount of data being generated every day, AI can dive deeper into the analytics and produce better predictive analysis and structure going forward.

#2 AI Can Assist With Talent Sourcing & Mangement

An AI assistant in human resources would be quite a helpful tool for any company. The HR department is shouldered with the responsibility of maintaining employee assessments, guiding workflow and processes, tracking and cultivating talent in the office, and recruiting greater talent for the organisation. This requires significant dedication and patience. So if you are chasing perfection, an AI assistant can act as a fillip to enhance this task in a timely or orderly fashion. 

Talent acquisition is where AI has been most useful; with the ability to go through countless potential employees and talent around the globe, AI assistant can easily figure out who fits the bill perfectly. While it took months for organisations to make a list of the promising potential employees for recruiting, now, with AI assistants, it can be a matter of minutes.

AI assistants could also help by evaluating employees and optimising team structure based on complementary skills and abilities of employees. 

#3 AI could create new positions

With humans and AI working side by side, there are certainly new managerial roles that may pop up. AI could be great as assistants, but as we saw with the industrial revolution centuries ago, new tech adoption doesn’t necessarily eliminate jobs – it often just changes their nature.

Preparing For An AI Era

So far, AI seems to be great for incorporating into a typical workspace, however, there are certain aspects that we ought to keep in mind. In a survey by Deloitte, only 31% of respondents felt they were ready for AI in their industry. 

#1 Employees

With the introduction of AI in the workplace, the job description at many positions is bound to change. The HR department will need to upskill its workforce while making sure they themselves are prepared for the change. It makes little sense to have an AI assistant in your office if the employees aren’t inducted about  their jobs.

#2 Transparency

Regardless of the state of AI adoption, transparency is an important aspect in any workplace. But with AI assistants in place, it becomes imperative to have a considerable degree of transparency that will satisfy all employees. With an AI assistant, an increasing number of decisions are likely to fall under its ambit. With that in mind, it is essential  that your workplace has a plan in place to ensure the process behind this is transparent so that employees can have access to all the information leading to the decisions.

Incorporating AI can also mean that significant authority may get concentrated in the hands of the few who manage these tools, which can pose a variety of challenges or concerns that will need addressing. With AI assistants relying almost entirely on data and rigid programmed rules, one could argue that it is an advantage because of the reduced probability of errors, and increased efficiency potential. However, another perspective would shed light on the perils of heavy dependency on automated tools – an organisation could potentially lose essential work and almost all functionality in case of technical errors.

With every major step there comes an array of pros and cons, and when adapting to the change is paramount, working around it should be a high priority. If implemented right, the symbiotic relationship between AI and Humans could turn out to be one of the greatest triumphs in the business and corporate sectors. Not only can this relationship mean higher efficiency and performance, this could very possibly be an evolution of how companies work. Considering all the facts, it is certainly safe to say that AI is the future of industry.

Is your team focused on their work or their wallet?

At some point in a managerial role, we may wonder if our team is indeed adequately focused to deliver efficient results. A well coordinated team results in faster and more productive output, to the advantage of both the company and the employees. But often the case is such that employees lose touch with this part of the concept, and eventually slack off, leading to a drop in performance. This is often the result of poor work-life balance, compounded by financial stress – an issue that’s steadily on the rise. 

Organisations have already begun to recognise this. According to Willis Towers Watson’s India Health and Wellbeing Study, 63% of employers have or are developing a strategy to improve employee financial wellbeing. While this may not entirely address our challenges, it’s likely to assist considerably.

Organisational culture isn’t a function of work ethics and values alone. It is impacted by your workforce’s mindset, which in turn is a consequence of their personal and professional lives. It’s therefore critical to address sources of stress – such as financial issues. If we’re looking to build a happy workplace, focusing on financial wellness can go a long way in improving workplace atmosphere and output. 

In addition to the positive cultural changes, a well constructed financial wellness program can assist with:

  • Superior engagement, productivity and results
  • Reducing attrition
  • Improved physical health of employees

The process isn’t as simple as rolling out conventional ideas – such as educational seminars, or sharing insights. The objective must be to ensure that the initiatives are truly effective, and that they address issues from multiple perspectives. For example, offering healthcare benefits could financially assist a number of employees. Others may look forward to easy and expedited access to credit whenever the need arises. Our approach must be one that works customer-backwards and addresses specific needs.

But activating financial wellness initiatives is only getting us halfway home. The next step is monitoring results and driving the evolution of these programs to our intended goals. Regular feedback, data analysis, and a consistent eye out for emerging trends and best practices are crucial components of a complete approach to our desired outcomes.

Of course, a shift in focus from work to wallet may not be driven by financial stress alone. It can stem from issues in culture, quality of work, leadership gaps, and more. 

Purpose

A team thrives on purpose. One of the primary factors behind a team or an individual not performing to their full potential can be a lack of clarity. A team needs clear-cut goals and support on how to achieve them. Only then can they work together to boost their performance and reap its benefits.

Strategy

Harmony isn’t consistent, and as a manager/leader, I must carefully evaluate strengths and ensure overall team efficiency and productivity. An ability to strategise and deliver, after all, is what is expected of us. Strategy can elevate the quality of time management – especially when we begin cutting down on extended meetings and talk sessions that often add decreasing value with increasing duration. 

The modern workforce is energetic, and seeking drive and purpose. It is also often seeking instant gratification, which can lead to frustration due to a sense of disconnection. Addressing these challenges demands a holistic approach – one that focuses on all possible factors simultaneously. After carefully evaluating and learning what works and what doesn’t, I believe that to ensure the financial security of both the organisation and the employees, we need to focus beyond financial wellness, and address some deeper issues as well.

 

What to Remember While Building a Financial Portfolio

A financial portfolio is a comprehensive collection of assets – stocks, bonds, liabilities, cash equivalents etc. Of course, it’s likely to consist of non publicly tradable securities as well, like art or real estate. A financial portfolio is usually held directly by investors, but can be managed by financial managers, or accountants. 

Building a stable, and solid financial portfolio is a crucial task for investors, as it often reflects how much or for how long an investor can, and is planning to invest. Portfolios are of paramount importance to financial managers, as they help in a ‘risk assessment’ exercise – assisting advisors in targeting the right investment opportunities based on the nature of a client’s past investments. Portfolios can be made for a range of requirements, like saving for retirement, short term wealth goals, or to some – just more money and income.

As may be obvious by now, a financial portfolio is a very important tool. To help you create a strong portfolio, here are some items you may want to consider on your financial journey:

Focus on Loans and Debts

The first step is to identify what you owe and what you have, and then create a strategy to minimize your debts. Conduct a comprehensive calculation of all the interest rates on your credit lines and get an idea on how quickly they can be paid. Start with your biggest loans. Create a balance sheet with as much detail as possible, and keep it in line with your long term financial goals. 

Invest in Long and Short Term Instruments

Set aside money for the future, by identifying suitable long and short term investment avenues. Diversify your investments via bonds, shares, commodities, enterprises etc. Weigh the risk factor, the lock in period, the returns and other benefits like tax deductions while investing. Develop a comprehensive investment strategy tailored to your goals and make sure to follow it with discipline.

Start As Soon As Possible

It is always recommended to start as early as possible, so that you have longer time frame to build and grow your portfolio. There is also an added advantage of lesser financial commitments early in life, which should result not only in your portfolio being stronger and more diverse, but also having enough resilience to ensure that it can withstand any financial shocks and disruptions. Also, there’s the obvious benefit of gaining valuable experience, which will increase your financial experience and wisdom.

Regularly Track Your Investments

One of the best ways to manage your portfolio is to continuously track your investments. For a constant income, ensure that you invest on a regular basis rather than in short spurts. By monitoring your investments, you can cut your losses by identifying the investments that seem poised for low returns. Such investments must be sold immediately to protect your portfolio’s performance.

Tax Liabilities

Managing a financial portfolio also involves managing all your tax liabilities. An investment in a tax deferred account will increase your wealth faster than investment in a tax liable account. Since you might have to pay taxes on your investments, do proper research and consider investing in places where you can take advantage of tax savings and decrease your taxable income. An example: Section 80C of the Indian Income Tax Act.

Conclusion

A strong financial portfolio is an indicator of wise investments, and to minimize your losses be sure to diversify your investments. No investment is 100% risk free, of course, but by careful evaluation of opportunities and investing small amounts in a variety of sources, you can minimize your risk and reap maximum benefits. You can also employ professional fund managers to identify risks and opportunities, which will help in streamlining your investments and building a tailor made portfolio.

Credit Score vs Credit Risk Assessment: What’s The Difference

The difference between credit score and credit risk assessment can often confuse both retail and institutional customers. Yes, the terms are fairly similar to each other and often sound interchangeable. They both provide a measure of a borrower’s credibility as well. But there are certainly differences on how they operate, how they are calculated and their impact on interest rates. Let’s take an in-depth view of both the concepts and put all confusion to rest.

Credit Score

A credit score is a numerical score that evaluates a person’s creditworthiness based on their credit history. Lenders often use this number to evaluate the probability of debt repayment on the consumer’s part. It ranges from 300 to 850, and logically the higher is someone’s score, the higher is his/her financial trustworthiness. 

Though there are many credit scoring models in use, the most commonly used by financial institutions in India is the CIBIL score, which ranges from 300 to 900.

The credit score plays an important role in the lender’s decision to offer credit. Borrowers with credit scores below 700, for example, are considered subprime borrowers. Lower credit scores can be among the leading factors affecting your personal loan interest rates. Banks charge a higher interest rate on loans to subprime borrowers, than they would charge a conventional borrower. A person with a good credit score can also negotiate a lower interest rate when borrowing from personal loan institutions. 

What factors impact your credit score though? Credit scores calculations are based on a variety of factors:

  • Credit History, which accounts for 30% of CIBIL score calculations.
  • Credit Utilization, accounting for 25%.
  • Credit Duration, accounting for 25%.
  • Miscellaneous factors like how many applications have been made in the past account for the rest 20%.

Having a good credit score does not automatically mean that a loan application will be approved, but it increases your chances significantly.

Credit Risk Assessment

Credit risk assessment involves estimating the probability of loss resulting from a borrower’s failure to repay a loan or debt. Traditionally, it refers to the risk that the lender may not be able to receive the principal and interest.

Credit risk assessments are carried out on the borrower’s overall ability to repay a loan according to its original terms. To assess credit risk, lenders often look at the 5 Cs: 

  • Credit history, 
  • Capacity to repay, 
  • Capital, 
  • The loan’s conditions and 
  • Associated collateral. 

Credit risk assessments have replaced credit scores as a way of checking a consumer’s trustworthiness, with many financial institutions establishing separate departments for assessing credit risks. They are a key factor for large loans provided by banks, financial institutions and NBFCs, such as mortgages, credit card bills etc. 

CRA has a significant impact on the interest rates, as higher the credit risk perceived, higher will be the interest rates for the capital. Creditors/banks can also decline loan applications if the risks are too high. In a nutshell, better credit ratings for borrowers attract lower interest rates.

CRISIL (Credit Rating Information Services of India Limited) and ICRA Limited are two of the most famous credit rating agencies in India.

Conclusion

Credit scores and credit risk assessment are important factors for a borrower. They are impacted by past credit history, but financial institutions are beginning to lean towards credit risk assessments when dealing with loan applications. CRAs are more comprehensive and provide a better overall idea about a borrower. Banks and big financial corporations are likely to use credit score as an important, perhaps leading factor in their assessments, while new-age lending portals – like EarlySalary offer personal loans using a broader approach to credit risk assessment, that does not rely on just credit scores. EarlySalary factors in your ‘Social Worth Score’ – based on a range of factors, allowing it to arrive at a more accurate estimation of your borrowing capabilities. Looking for an instant personal loan? Get started with EarlySalary here.