Whether you are a senior corporate officer of a major corporation with tens of thousands of employees or the employer of just a few, employers and employees alike can benefit from financial literacy education.
This proposition has been put to the test time and again.
It is clear that there are more employees who are “stressed” about their finances than not, according to “Financial stress and the bottom line: Why employee financial wellness matters to your organization,” a special report commissioned by PricewaterhouseCoopers. A link to the study can be found at pwc.to/2vPjMHT.
Productivity of stressed employees is impacted. Thirty percent of employees were “distracted by their finances at work,” and one out of two of those employees (46 percent) said they spent three hours or more a week dealing with issues related to their personal finances. In addition, 12 percent of employees missed work occasionally “due to financial worries.”
When asked “what are your biggest concerns about retirement,” 42 percent said “running out of money,” followed by “health issues” (33 percent).
What are employers doing about this state of affairs?
Many see personal financial challenges of workers as areas that employers can positively impact. According to a Society for Human Resource Management study, 83 percent of HR professionals reported that personal financial challenges had a large impact or some impact on overall employee performance. SHRM is a human resources professional society. To see the full survey findings, go to https://bit.ly/2Hu85HJ.
Mary Mohney, a certified public accountant and SHRM’s chief financial officer, made this point:
But there is more, Mohney added: “Financially literate employees also have a much better understanding of their total rewards: They understand the value of their 401(k) plans, health and disability benefits, tuition and profit-sharing plans and the like; they even have an easier time managing within high-deductible health insurance plans. Financial literacy carries through to employees’ everyday jobs, as well, in terms of increased business acumen.”
And, here is the bigger picture: “Financial literacy has a direct impact on the quality of employees’ lives,” said Mohney.
If your employer is not providing a financial literacy program that you find effective, don’t hesitate to raise the issue with your human resources department or boss.
I asked Mohney how to judge when a program needs to be improved. Her response: Encourage communication with employees, and look for signs of financial hardship. For example, if you spot trends on 401(k) plan loans and hardship withdrawals, that’s a sign that something is amiss. “When you see employees regularly using 401(k) retirement account as a bank account, that’s a good indication of financial literacy issues,” she said.
In some instances, of course, there may be no other option for the employee; however, patterns of withdrawals may be due to a misunderstanding how the 401(k) can help achieve a secure retirement.
“Financial stress, many times due to a lack of financial literacy, is currently affecting millions of people at home and at work,” said Mohney. With the help of employers who support financial literacy education, that does not need to be the case.
