Financial literacy is “the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing,” according to Investopedia. This statement insinuates that an individual must not only have the knowledge, but the ability to translate that knowledge into action.
Problem One: Knowledge
65% of Americans believe schools should provide financial education, but only 21 states currently require high school students to complete a personal finance course. In a recent SHRM study, 83 percent of HR professionals reported that personal financial challenges had a large impact or some impact on overall employee performance. Only 13% of HR professionals viewed their employees as ‘very financially literate.’ Financial stress, many times due to a lack of financial literacy, is affecting millions of Americans.
Problem Two: Taking Action
Armed only with knowledge, employees will see little improvement without access to appropriate, effective and personalized tools and resources to help them facilitate positive behavioral changes that will lead to improved financial health. Even with access to tools and resources, a program that lacks motivation to participate is likely to see the majority of employees at the starting line instead of running the race.
How can you help your employees?
The first step is to provide them with the tools and resources to honestly assess their current financial situation. Once they establish a personal baseline, they can set goals and determine an actionable plan that will allow them to make progress on their journey to financial health. Knowledge and insight into their personal financial state is step one. Utilizing appropriate educational tools and financial resources to change negative behaviors into positive behaviors is the key to that personal progression.
In a previous post, we outlined how you as the employer can determine if you have a successful and effective financial wellness program. Here are five elements to focus on:
By implementing a holistic financial wellness program for your employees, your organization will see the return on investment in key areas like productivity and retention. Financially healthy employees have lower stress levels and are able to focus on the task at hand, making them more effective. Lower stress levels, in turn, have been linked to lower health care costs and absenteeism. 60% of employees say they are more committed to their employer and more productive at work when their employer demonstrates a commitment to employees’ financial wellness.
Data doesn’t lie. Our retention analysis recently published by BenefitsPRO concluded that when organizations offer FinFit’s financial wellness program they are rewarded with:
18.8% increase in retention across salaried and hourly employees
$1,855 annual turnover cost-savings per employee*
Nearly $2 million saved annually for every 1,000 employees