Financial Education for Employees: Why Is It Important?

Financial literacy is a topic that is often overlooked in school. It is too overwhelming for many of us as it is rather unclear if you decide to educate yourself on it. However, without proper education in the financial sphere, people won’t be equipped to make smart financial moves and savvy decisions in terms of their personal finance including spending, saving, and debt management. Here is why providing financial education for employees is crucial these days.- Providing Financial Education

Benefits of Financial Literacy for Employees

Improving financial education for employees has several advantages:

1. Reduced Stress

It can be very stressful when you have a mountain of debt to handle. You may often get phone calls from lenders telling you to return the funds. There are a lot of loan stores near me if you urgently need extra cash for the short term but you need to realize that this cash should be repaid on time. Financial stress can pile up. Employee financial education programs may be beneficial for reducing this stress in the way that:

• Workers won’t have to discuss their money issues with colleagues
• Employees won’t ask colleagues for small loans
• Employees won’t ask for frequent cash advance loans

In other words, having financial literacy and being educated in this sphere will help employees reduce their stress, give them the necessary skills to take control of their personal finances, and show them how to boost their financial health.

2. Greater Productivity and Concentration

Also, employee financial education helps them improve their performance at work, making them more focused and organized which will improve their productivity as well.

3. Less Absenteeism

When you feel stressed out, you can’t feel healthy enough to focus on your work. Being more financially literate can help workers better cope with their stress, become more positive, and have a balanced mood that will lead to less depression and absenteeism.

4. Lower Healthcare Costs

When you often think about your money problems the continuous stress affects your physical and mental state. The level of cortisol goes up and has a negative effect on your hormone balance. As a result, your immunity, blood sugar control, hunger regulation, mood, and sleep regulation suffer.

The Present State of Employee Financial Literacy

Financial education rates have been rather low during the past few years. The TIAA Institute-GFLEC Personal Finance Index is a long-term project that began in 2017. This is an annual barometer of financial literacy among the American adult population. According to the 2022 TIAA Institute-GFLEC Personal Finance study on how financial literacy varies among U.S. adults, many Americans function with a poor level of financial literacy. On average, adults answered correctly only 50% of the index questions in 2022.

More than that, 20 percent of the respondents showed an extremely low level of financial literacy by answering only 25 percent of the questions correctly. It is evident again that greater financial literacy tends to translate into higher financial well-being and lower financial literacy is typically associated with lower financial well-being. Hence, it’s crucial to improve financial literacy for employees.

How to Financially Empower The Employees

Providing financial education to your employees is essential whether you are planning to recruit new talents or resolve the current concerns or distracted workers. Such education programs can elevate the culture and productivity of your team. How to get started?

Make a Survey Among Employees

The first step is to create a survey among your employees to learn about their current monetary concerns. You need to understand what the employees have in their minds. Have open communication with them and ask questions about what they really want. You should better understand their struggles and financial matters. Do they struggle to repay their student loans? Do they have a mortgage to pay off? Make a simple survey and make sure to include these topics:

• Debt repayment
• Saving for the long-term
• Credit management
• Investment strategies
• Spending and budgeting
• Preparing for retirement
• Purchasing a home

This information will help you make the next steps.

Provide Targeted Assistance

The next step is to provide financial assistance and guidance according to the information you’ve got from the survey. Every generation of your employees may have different goals and financial targets. For instance, Baby Boomers are more concentrated on retirement, Gen X employees want to get rid of their credit card debt and have enough savings for their kids’ tuition, while millennials might be more focused on paying off their student loans and purchasing a home.

Raise Financial Literacy

Employees should take advantage of the benefits their company provides in terms of financial education. Depending on their finance-related concerns, recruiters should raise knowledge among workers with customized communication. You may want to consider using webinars, emails, articles on the company website, social media platforms, videos, presentations, etc.

Support The Employees

Another step is to seek options to create a clear culture of employee support at work so that they don’t feel embarrassed about using benefits connected with financial education. Invite them to take part in open discussions so that such conversations are considered appropriate and relevant.

The Bottom Line

In conclusion, employees should be provided financial education at work. Employee financial education programs can teach workers how to make effective and informed decisions about their personal finances. They will teach them how to manage their expenses and income and provide relevant skills. 

It’s really important to show workers that this topic is relevant and necessary. Becoming more financially literate will help them overcome their own monetary issues, lead to higher productivity, and reduce stress at work. Recruiters will notice better loyalty and retention and less absenteeism among employees as their level of depression and stress will lower.