Can employees stressed out about their personal finances be as productive as those who are not? Not likely. Survey data supports the intuitive answer. For example, 41% members of the Society for Human Resource Management responding to a poll last year reported that an overall lack of monetary funds to cover personal expenses took a toll on some of their employees output levels.
The assumption seems to be not that employees arent paid a living wage, but that they have some shortcomings in their personal financial management skills. The solution offered in a report just published by Purchasing Power, a voluntary benefits vendor, is offering employees a comprehensive financial education program analogous to physical wellness campaigns.
In its report, Money Smarts: Helping Employees Make the Grade, Purchasing Power says that financial wellness is defined uniquely and differently by each employee, as each household has different priorities and financial obligations.
Broadly speaking, however, financial wellness is the ability of each employee to manage their finances for short-term needs while saving for long-term goals, according to the report.
To help employees achieve it, employers need to educate employees how to be smart about their money, how they spend it, and how they save it, so they have financial well-being now (or are working towards it) and in the future, Purchasing Power maintains.
As with any other complicated topic, astute personal financial management cannot simply be flung at employees with any expectation that the lessons will stick. The financial wellness education that employers implement should offer a variety of options that help employees choose the information important to them, the report states, citing a Bank of America Merrill Lynch employer guide on the topic.
In order of prevalence, following are the financial education topics of greatest interest to full-time employees, according to a Harris Poll:
- Saving for retirement, cited by 37% of survey respondents;
- Investment advice, also 37%;
- Paying off debt, 33%;
- Budgeting, 21%;
- Personal finance coaching, 14%;
- Saving for childrens education, 12%;
- Buying a home, 12%; and
- Understanding and building credit, 11%.
The level of employee interest in financial education is correlated to age. According to the report, 45% of millennials said they would take advantage of a financial wellness learning opportunity, whereas slightly fewer (43%) of generation X would do so, and only 32% of baby boomers reported interest.
Education is one thing. Taking advantage of it is another matter entirely. For that reason, Purchasing Power suggests that employee financial wellness initiatives involve some sort of financial assessment for the individual employee which would include outlining their current financial situation, identifying areas for improvement and implementing actions for their specific situation.
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