Personal Finance

Should Employers Provide Financial Education? Only If They Want Healthier And More Productive Employees.

Companies dedicate a substantial amount of resources to employee benefits so they can attract and retain quality workers. Over half of employers offer some type of employee-funded retirement plan, health benefits and/or access to life insurance to their employees.

However, even with these financial benefits, most employers are still missing a major piece of the puzzle when it comes to promoting the financial well-being of their employees: financial education. While financial education has always been important, the pandemic and the great resignation propelled the need for financial literacy and wellness. According to TIAA’s 2022 Financial Wellness Survey, Americans define financial wellness as ‘simply feeling comfortable with their financial situation. Over 50% believe wellness is defined as having the means to take care of family, not worrying about money or debt and feeling protected financially from life’s unexpected events.’ On a scale from 1-10, only 22% rate their financial wellness highly (a 9 or 10). This stems from financial gaps such as:

  • Only 25% of adults follow a detailed budget.
  • Although 78% have an emergency fund, less than 1/2 say they can cover 6 months of expenses.
  • Less than 25% of American households are debt-free. The average American has a consumer debt balance of $96,371, consisting of mortgages, home equity lines of credit, credit cards and student loan balances.

Whether they know it or not, employers are feeling their employees pain. Almost three-quarters of workers with high financial stress said it distracts them at work, according to a 2018 Financial Health Network Survey. Financial health also affects your physical health. The majority (90%) of Americans say that financial considerations have an impact on their stress levels. Stress of any kind can cause a huge number of health problems ranging from headaches and low energy, to heart disease and high blood pressure. Financial problems can also lead to divorce and depression. Any of these issues can significantly impact employers through increased healthcare costs, higher turnover, poor attendance and low productivity.

Although increased financial stressors and awareness are causing adults to reevaluate their financial wellness, only 28% work with a financial professional. This provides employers with a huge opportunity to fill this gap by providing holistic financial education programs. In fact, more than half (51%) of adults think employers have a responsibility to assist them in improving and maintaining their financial wellness. This can be done through training and education on the multiple aspects of a person’s financial life, including:

  • Budget and savings planning.
  • Creating attainable goals, and providing paths to achieve them.
  • Purchasing a home, and mortgage options.
  • Retirement projections and planning, especially for those nearing retirement. This includes how and when to take distributions and social security.
  • Investment education – not just within the available retirement investments, but provide education around full portfolio allocation and balancing.
  • Debt management, student loan and credit card payment options

Education can be in the form of one-on-one coaching with a financial planner, seminars or webinars. The TIAA study shows employees who have participated in an employer financial-wellness program are twice as likely to have a high financial-wellness rating than those who are not offered the resources or do not participate. Of those who participate, 54% are confident they will retire when they want, compared to 32% of those who don’t participate. Additionally, 50% of participants are confident they will not run out of money, compared to 29% of nonparticipants.

Being financially healthy at work means better morale, more focus and higher productivity. And 60% said they’d be more likely to stay at a job if their employer offered financial-wellness benefits, according to the Financial Health Network Survey.

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