Financial literacy may seem like a no-brainer, but statistics say otherwise. According to Annuity.org, more than 30% of Americans said they are just getting by in terms of their finances. This means that debt management, investment, and savings are far-fetched dreams for many people.
As an employee, having a strong financial literacy education means more productivity because they are better equipped to manage their finances and make sound financial decisions. The most common distraction in the workplace is financial stress, whether long-term or short-term.
Let’s explore the benefits of financial literacy for employees and employers.
Benefits of Financial Education for Employees
There is nothing perfect when it comes to financial literacy. We all need to be consistent when learning to manage the resources at our disposal. Our finances are no exception. Here are some benefits employees gain from financial literacy programs.
Reduced Financial Stress
Financial literacy programs are a great resource for employees. They help employees understand the effects their financial decisions have on their future. They can address major concerns like monthly expenses and retirement planning. Employees are given the support to make informed decisions about putting aside income for taxes, making changes to their life insurance or healthcare coverage, and more.
Once employees learn how to cater their finances to solve their worries, an added benefit to becoming informed is relieving the stress that comes with money management.
Better Retirement Planning
A report published by Federal Reserve in 2021 shows that 26% of Americans have no retirement savings. While most of the population may be in their early years of employment, the trend is worrying.
Financial education gives employees the knowledge and confidence to start saving early for retirement. It also creates a workplace environment where financial literacy is celebrated, ensuring employees are well-prepared for retirement.
Improving Financial Literacy
Managing debts, savings, investments, and expenses is not an easy balance. Many employees live paycheck to paycheck, and they’re unable to save for their future. If there’s an emergency, they will likely borrow money, which further affects their finances. The strongest asset to reverse that trend is knowledge.
Benefits of Financial Education for Employers
Employers also gain a lot from financial education programs in their workplaces. Here is why they should consider providing these programs.
Improved Employee Retention
The Society of Human Resource Management reports that employee retention is one of the primary reasons employers feel more responsible for employee financial wellness. Due to the Covid-19 pandemic effects, financial education has become even more essential.
Employees with money management skills are better equipped to face the challenges of job insecurity. They can make informed decisions on managing their finances during financially challenging times. And if employees know their employer is in their corner, preparing them with strong financial literacy skills, it promotes loyalty.
Financial stress is one of the primary distractions in the workplace. With proper financial education, employees can eliminate their worries about managing their finances. Consequently, they will be more focused on the job.
Employees feel appreciated when you can go beyond their salary and assist them with managing their finances. Again, it increases the likelihood of an employee being loyal to the company and, thus, be more productive in executing tasks.
Poor financial management has a ripple effect on an employee’s life. Because of stress and mismanagement of emergencies, absenteeism is likely to be higher.
Financial education helps workers to prepare for any emergency and handle their financial problems without affecting their work attendance. The attendance rate subsequently increases, and the company benefits from higher productivity.
Successful Financial Education Programs
When you decide to offer financial education, not every option will work. Understanding the needs of your workforce and aligning a program with their goals is essential.
The program should also be interactive and informative to ensure employees get the most out of it. Consider leveraging technology in delivering the financial literacy program to make it more accessible and efficient.
Seeking the services of a reputable financial professional is the first step to a successful financial education program. Work with consultants specializing in workforce management to help you create an effective and engaging program for your employees.
Although organizing financial literacy classes will cost an employer money, the benefits outweigh the cost. Having a motivated workforce and increased employee retention is priceless. Financial education in the workplace should be a priority for any company looking to create a successful business. With proper preparation and knowledge of money management, a company can help their employees navigate their finances, make informed decisions on investments and savings, and create an educated workforce inspired by their employer’s commitment to their long-term financial success.