If you spend a lot of time thinking about employee wellbeing, you’re probably well aware of how important financial wellness is.
Money can, after all, be a major source of stress and impact on a person’s overall wellbeing. In turn, that stress can impact on employee’s ability to be fully productive and present in their working environment.
But if a financial wellness programme is really going to work, it has to create a state of wellbeing where an employee feels minimal financial stress, has a strong financial foundation, and have an ongoing plan to help them reach their future financial goals.
Key to achieving that state is financial education. Here’s why:
It’s desperately needed
All around the world, people seriously struggle with financial literacy. According to a 2015 study, commissioned by Standard & Poor’s, and conducted Gallup, GFLEC, and World Bank, as few as 33% of the world’s adult population are money-smart.
While developed economies naturally have higher levels of financial literacy, they are still lower than they should be.
A 2016 study, for instance, found that two-thirds of Americans can’t calculate interest properly.
Given figures like that, can you realistically expect your employees to know what investment package to choose? Can you expect them to “just know” how much they should save every month and for what?
It’ll ease stress
Add low levels of financial literacy to rapidly rising living costs and you have a recipe for serious financial stress.
According to a PwC survey, 45% of US employees say that financial matters cause them the most stress in their lives—nearly as many as those whose top stress is their job, health, or relationships combined.
The picture only gets worse when you factor in younger employees who are still burdened by student loans, with 81% feeling stressed about finances and 41% having to use their credit cards for monthly necessities.
A good financial education will help people deal with those stresses more easily, allowing them to focus more on the job in front of them.
Moreover, research suggests that it’ll dramatically improve their overall financial situation, further eliminating stress.
It’ll stop them being taken for a ride
One of the dangers of being financially illiterate is that people become easy targets for those masquerading as experts.
Even those operating for legitimate entities can end up costing people serious money in fees for something they could easily manage themselves.
When it comes to ensuring employees aren’t taken for a ride by financial service providers, companies also need to bear some of the responsibility. In particular, they need to guard against third-party companies using financial education programmes to sell their own products.
As Scott Span points out on Forbes:
A key factor when a company claims to be an unbiased financial wellness program is finding out if all of their revenue comes directly from providing financial wellness services. Anything else raises the issue of potential conflicts of interest.
It’ll improve your bottom line
While the above should be reason enough for employers to invest in their employee’s financial education, it’s worth remembering that there are also clear business benefits.
The obvious gains are to be made in productivity – employees who feel like they understand their finances are less likely to be distracted by them. They’re also less likely to take time off to deal with financial troubles.
Moreover, because they’re less stressed, they’ll also be healthier, meaning that any medical insurance copayments made by the company will be lower.
Has your company benefitted from investing in financial education? Let us know in the comments section below.