Today’s workforce never learned how to handle personal finances
A bill was recently proposed in South Carolina that would require all students to take a personal finance course before they graduate. Continue reading to learn how this proposal could help today's workforce learn how to handle personal finances.
A bill was recently proposed in the South Carolina state legislature to require all students to take a half-credit personal finance course and pass a test by the end of the year in order to graduate.
This proposed legislation could prove to be a breakthrough idea because frankly, much of the high school-educated—or even college-educated—workforce has never had a formal education on how to take care of their personal finances, pay off their student loans, open an appropriate retirement account, select an insurance provider or generally prepare for personal financial success.
Without taking these now-required personal finance classes in high school, how is the current workforce expected to learn how to stay afloat and become financially stable?
For those in other states or for individuals who are past high school, the most logical solution for solving this problem is to put the onus on employers and business owners to teach their employees how to properly handle their financial well-being.
Having a staff full of financially prepared employees is in any businesses’ own interest, and there are statistics to show it. Numerous research studies have proven that companies with robust employee financial wellness programs are more productive because employees don’t have to spend company time handling personal financial problems. This results in an average three-to-one return for the organization on their financial wellness investment, according to studies from the Cambridge Credit Counseling Corp.
Employees who practice good financial wellness are also proven to stay with the company longer, be more engaged at work, less stressed and healthier—all of which add significant dollars to a company’s bottom line.
While understanding that HR, executives, and accounting have little time to spend teaching lessons in the workplace, how does a company go about offering financial wellness information to their employees?
There are several options available to companies when it comes to financial wellness. One of the most sought-after benefits in recent years is online financial wellness platforms that digitize the financial education process. This allows employees to work on their financial education on their own time from the privacy of their home computer, using a friendly and simple interface. And benefits solutions providers have access to a number of these resources – all companies need to do is inquire with their provider.
It is important to remember that not all financial wellness platforms are created equal in what they offer. Depending on the specific needs of an organization, they should assess the offerings available through each service provider to ensure they receive the program they intend to offer to their employees. Most platforms offer partial solutions and tools that could include financial assessments, game-based education, budgeting apps, student loan assistance, insurance options, savings programs, and even credit resources to help those who don’t have money saved to afford an emergency cost.
Not everyone goes to school to learn accounting, so we can’t assume that everyone knows what they are doing when it comes to personal finances. South Carolina is taking a major and important step towards improving their citizen’s futures by suggesting everyone take a personal finance course in high school. This could have a massive and positive effect on the economy in the future.
Finding a financial wellness solution that checks most, if not all, of these boxes will enable employees to take the initiative to either continue what they’ve learned (in the case of South Carolina students) or start down the path of gaining financial independence. Implementing a complete financial wellness toolset to give employees the ability to prepare for financial success is a huge step towards significantly increasing productivity.
As an engaged employer who cares about the well-being of their employees, it is important to offer as many resources as possible to encourage employees to stay financially well, decrease stress, and increase productivity in the workplace.
Millennials and money — How employers can be a financial literacy resource
Recent reports show student loan debts reached a $1.5 trillion crisis in 2018, leading many to believe Americans need a little help with money. Read on to learn how employers can help with financial literacy.
It’s clear that Americans need a little help with their money — in 2018 student loan debts reached a staggering $1.5 trillion crisis, employees continue to retire at a later age every year, and studies have shown that 65% of Americans save little to nothing of their annual income.
One subset of the American population that has even greater troubles with their finances is millennials, or those aged 23 to 38 as of 2019. This age group has lofty goals — 76% believe that they’re headed for a better financial future than their parents and 81% plan to own a home — but many millennials aren’t saving money in a way that actually leads them towards that future. In the last year, 43% of young adults had to borrow money from their parents to pay for necessities and 30% had to skip a meal due to lack of funds. Where’s the disconnect between millennials’ financial optimism and the reality of their financial circumstances?
Part of the problem lies in a lack of financial literacy. A study conducted by the National Endowment for Financial Education found that only 24% of millennials answered three out of five questions correctly on a survey looking at financial topics, indicating only a basic level of literacy. This same survey found that only 8% of millennials who took the test were able to answer all five questions correctly.
That’s not to say that understanding the intricacies of financial planning is easy. Everything from taxes to investing often requires professional advice. It’s no wonder that millennials are struggling with their finances: only 22% of those in this age group have ever received financial education from an educational institution or workplace. Millennials are struggling to pay for basic necessities and financial advice is simply not a priority. Many avoid seeking the help they need because they perceive it to be too costly.
This is an opportunity for employers that want to provide valuable resources to their employees, as financial wellness programs are likely to be the next employee benefit that millennials ask for.
Right now, millennials are the largest segment in the workforce, and by 2030 the U.S. Bureau of Labor Statistics estimates that this age group will make up a staggering 75%. In a tight labor market, current job seekers can be more selective when deciding where they want to work. For employers, studies have shown that 60% of people report benefits and perks as a major deciding factor when considering a job offer.
To stand out from competitors and provide true value to young employees, companies should consider including financial wellness plans in their overall benefits package. The most comprehensive financial wellness plans generally include access to advice from a certified financial planner in addition to legal, tax, insurance and identity theft support. For millennials trying to get in control of their finances, these types of programs can be invaluable. For example, young employees can get assistance setting up a 401(k) account, dealing with taxes for the first time or learning to save and invest.
In 2019 and beyond, millennials are going to be looking for employers that support them not only in the office but outside the office as well. By providing financial planning tools in the workplace, companies can be a valuable resource to younger employees who will appreciate early and frequent conversations around how to manage their money.
SOURCE: Freedman, D. (19 February 2019) "Millennials and money — How employers can be a financial literacy resource" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/how-employers-can-be-a-financial-literacy-resource?brief=00000152-14a7-d1cc-a5fa-7cffccf00000