With prices increasing faster than wages in the past year, employers and employees both need to tighten their belts. Fortune reports that even more workers (41%) are living paycheck to paycheck than before the COVID-19 pandemic. It makes sense that Americans are increasingly stressed about money — and this can often translate to poor mental health for employees and declining business results for organizations.
Because financial stress can contribute to mental health issues and absenteeism, it makes good business sense for your organization to educate employees about financial literacy– especially those returning to the workforce.
For those individuals who lost their jobs during the pandemic, returning to work will certainly improve their finances. Still, they may need extra help with monetary decisions precisely because they were not working and may have fallen behind in payments or incurred more debt.
Allsup Employee Services (AES) helps people with disabilities return to work. Our clients were among the hardest hit with unemployment throughout the pandemic. Part of the value we provide is to help them reclaim their financial future. In addition, our parent company, Allsup, is expanding the financial solutions offered to people with disabilities seeking Social Security Disability Insurance (SSDI) precisely because individual and family finances are taking a hit with the current economy.
Our clients aren’t the only ones struggling with their finances. Rising prices on just about everything make financial issues a hot button topic for every American worker. Plus, employees scored 52% on a basic financial knowledge test, leaving researchers to conclude that many Americans lack the knowledge to make sound financial decisions. A financial literacy program can help teach employees these fundamental skills. So, what are the benefits of such a program? And how does investing in financial literacy help your employees and improve your company’s bottom line?
Reducing Employee Stress
When employees receive education about finances, their uncertainty about their financial situation can be reduced, which can benefit their levels of stress. Employees surveyed by PwC after a financial literacy program reported that their stress dropped significantly. The percentage of those who said they were highly stressed dropped from 52.4 to 19.2 after the training. More than half of the participants (56%) said they were now in a better position to manage their finances.
A financial literacy program can help your employees understand how money works and how to make responsible choices. They can learn approaches to paying off debt, creating and sticking to a budget, and saving for emergency expenses or for long-term goals like a home or retirement.
A 2020 personal finance study said that workers preoccupied with money issues can spend up to six hours per workday worrying about issues related to their personal finances. Employees focused on their cash-flow problems are more likely to miss deadlines (5.8 times higher) and produce lower quality work (4.9 times lower) than their financially solvent counterparts. The study concluded that increasing productivity is a major reason for organizations to hold financial literacy programs and that “addressing low financial literacy should be a key element of such programs.”
Boosting Recruitment and Retention
In today’s challenging job market, recruitment and retention are all-important. Running a financial literacy program is an effective way to attract and keep employees. Research from Financial Health Network shows that although a majority of workers are interested in financial guidance, less than one-third of them are currently receiving any. Especially of interest to employees of all income levels are debt-related benefits, such as audits and negotiations for medical bills, debt consolidation and emergency loans. Only 20% of workers currently have access to these.
Nearly 75% of employees surveyed indicated that financial wellness benefits are important to them, but few organizations are offering a complete portfolio. The good news here is that there’s room for your company to distinguish itself with financial wellness benefits.
Before your organization creates a financial wellness package, be sure to ask your employees what they’re interested in, which pain points you can help them relieve and what are their long-term goals. Also, remember that your workers with disabilities stand to gain from these perks as well. Workers who have been through a life-changing disability may understand more than most the financial impact of their income-earning potential. They are an experienced resource pool that can give your organization a competitive edge.