With prices increase faster than wages over the past year, both employers and employees are having to tighten their belts. Wealth 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 that can often translate to poor mental health for employees and lower business results for organizations.
Since financial stress can contribute to mental health issues and absenteeism, it makes sense for your organization to educate employees on financial literacy, especially those returning to the workforce.
For people who have lost their jobs during the pandemic, returning to work will certainly improve their finances. Yet they may need extra help with money decisions precisely because they weren’t working and may have fallen behind on payments or taken on more debt.
Allsup Employee Services (AES) helps people with disabilities return to work. Our customers have been among the hardest hit by unemployment throughout the pandemic. Part of the value we provide is helping them reclaim their financial future. Additionally, our parent company, Allsup, extends the financial solutions available to people with disabilities seeking Social Security Disability Insurance (SSDI) precisely because individual and family finances are impacted by current economic conditions.
Our customers aren’t the only ones struggling with their finances. Rising prices on just about everything are making financial troubles a hot topic for every American worker. Additionally, employees got 52% on a test of basic financial knowledge, leaving researchers to conclude that many Americans lack the knowledge necessary 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?
Reduce employee stress
When employees receive financial training, their uncertainty about their financial situation can be reduced, which can benefit their stress levels. Employees interviewed by PwC after a financial education program reported that their stress was significantly reduced. The percentage of those who said they were very stressed fell from 52.4 to 19.2 after the training. More than half of 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 long-term goals like a home or retirement.
A According to a 2020 personal finance study that money-preoccupied workers may spend up to six hours a workday worrying about issues related to their personal finances. Employees focused on cash flow issues are more likely to miss deadlines (5.8 times more) and produce lower quality work (4.9 times less) than their financially solvent counterparts. The study concluded that increasing productivity is one of the main reasons why organizations organize financial literacy programs and that “addressing low financial literacy should be a key part of these programs”.
Boost recruitment and retention
In today’s tough job market, recruitment and retention are of the utmost importance. Managing a financial literacy program is an effective way to attract and retain employees. To research from the Financial Health Network shows that although a majority of workers are interested in financial advice, less than a third currently receive it. Debt-related benefits, such as audits and negotiations for medical bills, debt consolidation, and emergency loans, are especially great for employees of all income levels. Only 20% of workers currently have access to it.
Nearly 75% of employees surveyed said financial wellness benefits are important to them, but few organizations offer a comprehensive portfolio. The good news here is that your business has the opportunity to distinguish itself through financial wellness benefits.
Before your organization creates a financial wellness package, be sure to ask your employees what interests them, what pain points you can help alleviate, and what their long-term goals are. Also remember that your disabled workers also stand to gain from these benefits. Workers who have experienced a life-altering disability can better understand the financial impact of their earning potential. They are a pool of experienced resources that can give your organization a competitive edge.