Last week we discussed the growing number of employees who are stressed about their finances. According to PwC’s Employee Financial Wellness Survey 15% of employees who earn $100,000 or more annually cannot make ends meet between paychecks.
Financially stressed employees don’t leave their difficulties at home. It leaks into the workplace through increased distraction and absenteeism, decreased productivity and increased turnover.
For this reason, more companies are looking at how they can help.
Of course, there are numerous factors that contribute to financial stress that are beyond a leader’s control. Economic conditions like recessions and inflation, the cost of housing, rising medical costs, and extreme weather events are just a few.
Yet, there are areas where company leaders can have an influence.
One of these is in promoting financial literacy. Financial literacy refers to the ability to effectively manage one’s financial resources. It involves possessing the knowledge, skills and attitude to make financially sound decisions, plan for the future, and navigate challenging events such as losing a job, supporting a child’s education or saving for retirement.
According to a report produced by the 2023 TIAA Institute-GFLEC Personal Finance Index, financial literacy among Americans is alarmingly low across generations. Individuals with low financial literacy are more likely to struggle making ends meet, be saddled with debt, and lack sufficient savings to cover emergencies.
Promoting financial literacy among employees is a proactive way for companies to help their workforce manage personal finances and reduce the possible impact that their financial strain has on the larger organization.
Think of it as an additional benefit offering.There are numerous ways this can be done. For maximum effectiveness, we recommend surveying staff to learn about the specific knowledge and skills that employees might be interested in. Once the needs are identified, leaders can design services and deliver them in a variety of formats, and/or incorporate them into existing training programs.
Here is just a sampling of ways that promoting financial literacy among employees might look:
Provide Access to Education
Host workshops covering topics such as budgeting, saving, investing, retirement planning, and debt management.
Provide assessment tools that allow employees to assess their financial health and track progress toward financial goals.
Regularly distribute information related to financial health such as tips on how to save for a house, manage credit, or reduce expenses.
Provide resources that educate employees about retirement planning and the benefits the company offers.
Provide investment education that teaches employees the basics of investing, risk management, and how to diversify their retirement portfolios.
Educate employees on the full value of their compensation package, including salary, bonuses, healthcare, retirement contributions, and other benefits like stock options or profit-sharing.
Create Financial Wellness Programs and Services
Establish savings programs where employees can automatically allocate a portion of their paycheck into a savings account.
Provide Health Savings Accounts (HSA) and Flexible Spending Accounts (FSA) along with workshops that teach employees how to maximize the benefit of these programs.
Partner with Financial Institutions and Experts
Collaborate with banks or credit unions to provide preferential rates to employees for loans, mortgages, or savings accounts.
Bring in financial advisors, CPAs, or personal finance coaches to offer guidance and answer employee questions.
Provide employees with access to confidential one-on-one financial consultations.
Workplaces that prioritize financial literacy among employees are investing in the long-term well-being and success of both individual employees and the company. This can have the added effect of boosting employee morale. Moreover, by supporting financial education, businesses contribute to the broader goal of creating a financially literate and secure society.
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