A 2016 FINRA Foundation study found a full two-thirds of Americans would fail a financial literacy test.
Does that stat surprise you? It probably shouldn’t, given the deck that’s stacked against most Americans.
Think about what most people are facing:
- Busy schedules. Between work, soccer games, exercising, and an always expanding list of other items, people either just don’t have the time or don’t necessarily want to prioritize getting smarter about their finances.
- Stress and anxiety. According to a new American Psychiatric Association (APA) poll, Americans’ anxiety levels experienced increased in the past year. More are anxious than last year in all five areas (health, safety, finances, relationships and politics) with the greatest increase in anxiety about paying bills.
- Culture of consumerism. Buy, buy, buy. That’s the culture we’ve all been a part of from a very early age. And, it flies in the face of many positive, encouraging financial principles.
Recent studies prove this out, too. 65% of employees report that just keeping up with monthly expenses represents their biggest financial worry. 64% of employees worry about running out of money in retirement.
Increasingly, employers are recognizing this concern and taking steps to help improve employees’ financial literacy. After all, financial literacy and wellness are important to employers since financially healthy employees make for a better engaged, productive and reliable workforce.
So, what strategies can you take to improve the financial literacy and wellness of your employees?
1. Offer financial assessments
Financial assessments can be great learning tools for most employees. Typically, an assessment provides a snapshot of the person’s financial strengths and pain points. It engages employees and provides a great baseline for financial goal-setting.
Many times, people feel anxious about finances because they aren’t sure what’s causing their stress. An assessment not only can help uncover those reasons but also put employees’ fears at ease a bit simply by helping them understand where they should focus their time and efforts. It’s a little like completing a health-risk appraisal — the financial assessment can sometimes act as the catalyst for taking actions to improve their financial health. For example, an employee who doesn’t have a lot of financial wiggle room each month may be focusing too much on retirement instead of managing their existing debt.
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2. Point to free financial resources
Podcasts. Web articles. Social media. There are so many options for obtaining financial knowledge in today’s media environment. But with so much content, where should employees start? Your first step: Help employees determine their area of focus. For example, you’ve noticed that many of your employees are attempting to pay off debt. Why not try to source articles that explore the various payoff strategies, interest rate negotiation tips, and programs or services that can assist them?
Second, acknowledge that people absorb and learn new information in different ways. For example, some employees like to read short articles linked on social media or various web sites. Employees who are concerned about debt and managing their expenses may want to check out the wildly popular Mr. Money Moustache blog. Or, maybe your employees prefer books and want to discover everyday money saving tips. Clark Howard’s Living Large for the Long Haul could be a contender for a company lending library. Or, maybe your employees prefer to listen? A podcast might work best. Let’s say your employees want to get smarter about finances in general — why not point them toward NPR’s long-running Planet Money podcast for tips and insights?
3. Suggest creating a monthly budget
One of the most critical things employees can do to learn more about managing their money is also one of the simplest: start a monthly budget. Clients who use our MoneySteps Financial Wellbeing Program have access to a suite of calculators and tools to help them establish (in many cases) their first monthly budget. Using tools like these to track monthly spending will allow employees to see exactly where their money is going each month, and identify places they could save. This can be an eye-opening experience. Another option for employees: Their local credit union or bank. They typically have similar budgeting tools to offer.
4. Provide personalized support
OK, I’m biased, as this is my job, but I believe providing financial coaching to employees is the most important thing any employer can do to help improve financial wellbeing. Like I said earlier, there’s no shortage of financial information out there, but there’s also no substitute for an unbiased, experienced financial guide. Financial coaches can help employees navigate complex situations and provide sound counsel tailored to individual needs.
Often times, one of the greatest assets that a coach brings is confidence building: confidence in financial knowledge, decision-making, and goal setting. We know that big achievements are not made overnight. Instead, they are made over time through countless small steps. This is where a good financial coach is invaluable.