Financial Wellness: Employee Education Pays Off in Big Ways

Financial Wellness: Employee Education Pays Off in Big Ways

“Education is the passport to the future, for tomorrow belongs to those who prepare for it today.” -Malcolm X

Those who are willing to educate themselves can set themselves free from ignorance. It sounds obvious, but let’s consider how this applies to financial literacy. So many of the financial mistakes people make today are simply because they don’t know any better. They were never taught to create a household budget or how to balance a checkbook. Or they overspend and go deep into debt because they don’t understand compound interest, which as Albert Einstein so aptly put it, is “… the eighth wonder of the world. He who understands it earns it… he who doesn’t pay it. Compound interest is the most powerful force in the universe.”

There are the lucky few who become wealthy due to dumb luck. But more often than not, the “haves” and the “have-nots” are separated by whether or not they’ve educated themselves on how their money can work for them, not against them. And the same can be said for retirement preparedness. Workers who truly understand the significance of saving early and often, and how their money can grow over time through compound interest and investment earnings tend to finish their careers more “retirement ready” than those who don’t.

Employers can help foster fiscal literacy by offering financial wellness programs in the workplace. Study after study shows that financial wellness programs lead to a happier, more productive, more engaged workforce. Of course, this benefits employees, but it also helps employers, too, returning between $1-$3 for every dollar invested, according to a report from the Consumer Financial Protection Bureau, cited by ForUsAll.

Many employees today are distracted, even stressed, by financial troubles. Prudential offers some compelling statistics:

  • 78% of people don’t feel financially secure
  • 63% don’t have enough of a rainy-day fund to cover a $500 emergency
  • 70% of HR professionals say financial issues impact employee performance

If those numbers give you pause, they should. Financial literacy, or the lack of it, in the U.S. is serious business. And it’s getting in the way of employers’ ability to help workers create their best lives before, and during, retirement. But look, this stuff isn’t rocket science. It may seem intimidating, but it’s not. Not really. Anyone can learn to make a budget, pay off debt, save for the future, even invest a little. There are tons of communities on social media devoted to these topics, and with a search engine and a little time, anyone can learn about how to be smarter with their finances.

That is if they have the initiative, and therein lies the rub. It is easier to put off facing one’s financial foibles, or to say “I’ll deal with it later,” or to come home from a long day at the office and decide to veg out with Netflix instead of having that long overdue conversation with one’s spouse about how to overcome their burdensome (and growing) consumer debt. Then, instead of taking action, these very same people come back to work the next day and stew and stress about their financial woes, likely after a long night spent tossing and turning and worrying about them, too.

Financial wellness is catching on among employers, with many companies now offering such programs as an employee benefit. In addition, many providers now offer financial wellness programs customized to the specific needs of a company and its workforce. And if for some reason you’re not yet ready to commit to a full-on financial wellness program, as we wrote the other day, financial advice delivered via a dedicated financial advisor is also critical to helping employees reach their financial goals for retirement. If your plan has an advisor, he or she can be an excellent resource for financial education and retirement planning for your employees.

At the end of the day, leaving your employees to their own devices when it comes to achieving financial literacy won’t get the job done. They need that education (dare we say hand-holding?), and providing it in the workplace makes it easily accessible, helps reduce employee stress and bolster productivity, and benefits the bottom line, too. Moreover, in the long run, greater financial literacy leads to better retirement outcomes. And that’s something we all want.

Robyn Kurdek

Robyn Kurdek

Freelance writer with nearly 2 decades of financial industry experience, with niche expertise in the defined contribution (DC) industry. I also have defined benefit (DB) plan knowledge. I write all types of content for retirement plan participants, sponsors and advisors, including web copy, newsletters, white papers, fact sheets, blog posts, financial wellness articles, and more. "I speak DC."
Robyn Kurdek
x

Check Also

Benefits of HSAs

NIPA News: Benefits of HSAs and How to Start One

The Benefits of HSAs and How to Start one Health Savings Accounts are gaining popularity allowing employees to save not for what will likely be large health care costs in retirement. Andy Lovell, VP at the National Benefits Group with ...