More and more companies are realising that financial wellness is as important to their employees’ wellbeing as more traditional health and wellness programmes.
That’s a good thing both for employees and the companies themselves. Financial stress can affect an employee’s performance, force them to take time off work, or even seek out better paying employment.
Anything which mitigates that stress means a more peaceful and productive work environment.
Small wonder then that around 80% of finance executives agree that their company will benefit from having a workforce that is financially secure, and that employers should assist employees in achieving financial wellness during working years.
In many companies, this assistance involves helping with retirement savings or investment planning. There is, however, another crucial aspect of financial wellness: money management.
Helping your employees understand their daily spending and saving habits can have a massive impact.
We’re not very good at it
When it comes to managing personal finances, most people are clueless. A 2014 study by economists Annamaria Lusardi and Olivia Mitchell revealed stunning levels of financial illiteracy across the world, with most participants unable to answer three simple questions correctly.
The situation starts to look even more dire once you learn that most British people don’t track their spending or that more than half of South Africans hand over at least 75% of their incomes to debt repayments every month. Even scarier is that much of that debt is racked up on luxuries and non-essentials.
While it’s obviously not your fault that the general population is so bad at managing money, you can make things better, if only for your employees.
Your employees want help
You might worry that your employees won’t be interested in any money management assistance you offer. That couldn’t be further from the truth.
A MetLife study found that 50% of US employers say financial education as an employee benefit is important and that 49% of employees want financial education at work.
Add in the fact that just 34% of employers offer this kind of education and you can see why providing money management support can set your company apart.
The stakes are higher than ever
According to Lasardi and Mitchell, the high levels of financial illiteracy observed in the study couldn’t come at a worse time.
Ignorance, they point out, is more dangerous than ever. “Financial markets around the world have become increasingly accessible to the ‘small investor,’ as new products and financial services grow widespread,” they write.
As the 2008 financial crisis showed, approaching those products without the right prior knowledge can be catastrophic.
For many, especially those in developing markets who can’t lean on generational wealth or social security nets, bankruptcy is just one bad decision away.
Now, it doesn’t matter whether you fix cars or build enterprise-scale apps, if one of your employees is facing bankruptcy, they’re not going to perform to their full potential.
You will see results
When it comes to managing money, it’s all too easy to think that some people just can’t be helped. In fact, the opposite is true and a little education can go a long way.
According to Lasardi and Mitchell, providing financial knowledge to people with low levels of education improves their economic situation by an amount equivalent to 82% of their initial wealth.
Do the same for people with university-level education meanwhile and you’ll improve their economic situation by an amount equivalent to 56% of their initial wealth.
Provide a direct link between those results and your assistance in financial management and your employees are much less likely to skip off to your competitors.
Given that money management support is something your employees likely both need and want and that it has clear benefits for your business, why wouldn’t you include it in your financial wellness programme?