Study after study proves how little Americans understand about their money. Even if they know
financial facts, such as how interest rates work, many people don’t actually understand what they should be doing with their money and how their current financial behavior affects their future. People are increasingly deepening their debt, making it impossible to catch up or build savings. Financial illiteracy, or not having the skills to make responsible financial decisions, is likely to cause other serious problems, such as anxiety or depression from frequently worrying about money, savings, and eventual retirement. This overcoming stress can affect a person’s attitude and overall performance in the workplace.
I have been conducting financial literacy programs within corporate environments since 2007. I have completed various types of programs from one day 90 minute workshops to once a week lunches, and have experienced the benefits and success they bring to companies and their employees firsthand. Here is my free employer’s guide to financial wellness to help you get started.
As more and more people today struggle with their finances, employers can and should promote some type of financial literacy program throughout their company. Employers have the unique ability to improve the mental health and overall lives of their employees by strengthening their basic financial literacy and comprehension. A financial literacy program not only provides better debt and retirement savings outcomes, but can also increase employee productivity. Here is a deeper look into some of the many positive impacts of financial literacy programs:
Individual and Economic Benefits
Financial wellness can create positive effects on individual and economic levels. By implementing financial programs, companies can singlehandedly boost the financial knowledge of their employees and help strengthen the US national economy. While financial literacy can’t combat every problem, such as unemployment rates or the insurmountable cost of higher education, it can help people become savvier with their money. This will allow people to better navigate their current financial situation, plan for the future, and handle any sudden financial curveballs. Financial literacy has severe impacts on economic health. Increased knowledge will lead to a stronger, more competitive economy. While individually, financial education can help people make better investments, accumulate more wealth, and have a higher inclination to plan for retirement.
Elevated Company Culture
“Company culture” has become the corporate world’s new buzz word, as more and more companies realize the importance of creating a great work environment for their employees. One easy way to accomplish this is by offering financial literacy programs. The workplace is one of the most effective places to administer financial literacy training, because most people receive their main source of income through their workplace and are encouraged to utilize their company’s retirement programs. By providing workplace financial education, employers can help their employees develop skills to manage their paychecks and save for retirement. This will simultaneously elevate the company’s culture, because employees will feel as though their employer is on their side and cares about their financial future.
Increased Employee Productivity and Satisfaction
The benefits of workplace financial education also reach the company as a whole. Employees who are less burdened by financial problems are much more productive, innovative, collaborative, and engaged at their jobs. More and more research points to the positive relationship between financial wellness and worker satisfaction and productivity. For example, Caroline Cakebread, a personal finance writer, cites research by Joo Kim, writer of Financial Stress, Pay Satisfaction, and Workplace Performance, in her article on workplace financial wellness. Kim has found that employees with more financial distress are absent from the workplace more often, display less commitment to their organization, and are less satisfied with their pay, regardless of the amount of money they make.
The statistics alone speak to the need for financial literacy training. 7 out of 10 American workers say financial problems are their most common stressor. And 39% admit that they spend at least 3 hours a week preoccupied or distracted by their financial issues while at work.
Companies that implement an effective financial wellness program will experience a huge ROI through the dramatic reduction of employee sick days, healthcare costs, worker’s compensation, and disability management claims. Furthermore, their employees will work harder and perform at a higher level if they are not distracted by their personal financial issues.
Workplace financial literacy programs are becoming the new norm, as employers recognize these benefits and the role they can play in their employees’ financial health. Over 40% of companies say they already have some type of financial wellness strategy in place or they plan to introduce one. As employers search for a financial literacy program, they should take into account that not everyone has the same issues and needs. What works for one organization might not work for another. I suggest conducting an employee survey in order to gain a sense of what would be the most beneficial for the most people. For instance, my financial wellness programs are customized and structured around the specific company I’m working with and the topics its employees want to cover.
With financial literacy programs, companies have the power to raise their bottom line by increasing employee productivity and prevent their employees from making poor financial decisions. There are simply too many benefits to ignore.
Holly Morphew is an award winning financial coach, entrepreneur, and speaker. She is a Certified Financial Health Counselor, Certified Student Loan Counselor, and Accredited Financial Counselor ®. Her unique background in business, corporate America, and real estate give her a broad perspective to help her clients create wealth, stop living paycheck to paycheck, and eliminate debt. View client testimonials here!
Holly began teaching personal finance in 2006 to young adults as a service project with Rotary International. Her workshops were so popular she decided to teach personal finance full-time so she could help more people. She created The Financial Impact System, a step by step guide to master your money, streamline spending, protect your money, and create multiple streams of income.
Holly is originally from Boulder, Colorado. She received the prestigious “Rotarian of the Year” award in 2007/08 for her work in financial literacy. Holly served as Treasurer of the Erie Rotary Club from 2006–2009. She has a B.A. in International Business & Japanese from the University of Colorado. She now resides in Denver, Colorado. Holly also plays competitive beach volleyball year-round, practices yoga, and loves to hike with her two dogs.
Caroline Cakebread, “Why Should Employers Care About Financial Literacy,” Plans & Trusts Vol. 32, No. 3, (2014): pp. 9. https://www.ifebp.org/inforequest/ifebp/0165308.pdf