Financial education provides a twofold benefit: It helps employees find personal improvement in their financial health, and it helps increase employee productivity by lowering their stress.
Employers have a special opportunity to help educate workers and assist them in becoming more financially savvy. It may seem scary to use company time to offer education that does not appear to have immediate results, but many studies have shown that there is a significant return on investment available for employers who undertake this type of effort.
1. Better Adoption of Financial Programs
Employee participation in health and flexcare plans, 401k benefits, employee financial education programs, and other wellness offerings helps employers negotiate premiums on the open market. This participation ensures that employers aren’t pigeonholed into lower-quality programs simply because their employee adoption leaves something to be desired.
Better adoption of financial programs also strengthens the overall impression of company benefits and makes retention and new employee acquisition an easier sell.
2. Better Employee Health
Traditionally, we consider wellness to be covered by physical activities and better eating habits, but wellness is closely related to financial health, too. According to the American Psychological Association, a full 72 percent of adults in 2015 felt intermittently stressed about money, while 22 percent felt extreme financial stress.
These statistics should be concerning for employers because extreme stress leads to worsened health, and therefore, less time spent in the office being productive. Extreme stress can cause employees to pick up unhealthy habits, too, and those unhealthy habits can exacerbate an environment of stress.
By incorporating financial education into your business, you can increase your workers’ health and productivity, while lowering your healthcare premiums.
3. Fewer Distractions and Higher Productivity
Workers who struggle to pay bills and balance their finances outside of work often use up time in the office trying to sort out those personal matters. According to a study by Pricewaterhouse Coopers, one in five employees reports that personal finances have caused a notable amount of distraction while they were on the clock.
Even more concerning, 37 percent percent of all employees spend three full hours or more a week at work thinking about or handling their finances. Over a year, this adds up to 156 hours of lost productivity. When translated to workdays, an employer is losing 20 days per year to financial stress.
Multiply that number by the size of the workforce, and productivity as a result of financial stress begins to look like a very serious issue. And these numbers don’t include money issues caused by financial emergencies, or lack of sleep from financial stress that can keep employees out of the office altogether.
If equipped with better financial education, employees can stay on top of their financial responsibilities, experience fewer emergencies, and remain better focused while at work.
4. Better Commitment and Improved Morale
If employees feel that their employer has a vested interest in helping them succeed in building and maintaining their current finances and financial future, that sense of security helps improve the bond between business and employee.
Providing financial education and offering additional benefits (such as 401k plans, HSA and FSA programs, and financial counseling) can inspire employees to become more loyal and engaged.
5. Less Strain on the HR Department
Human resource expenses go down when employees are in a position of healthier financial well-being. Lower financial stress and better employer support can result in more satisfied employees, meaning a smaller burden on the HR department. Financial freedom also reduces the number of wage garnishments and payroll advances HR has to handle. Additionally, with a competitive benefits package to tout, the HR department will have an easier time filling open positions with high-quality candidates.
Resources:
- http://www.huffingtonpost.com/henry-albrecht/4-reasons-financial-welln_b_9189940.html
- http://retirehappy.ca/benefits-of-financial-education-at-work/
- http://www.pwc.com/us/en/private-company-services/publications/assets/pwc-employee-financial-wellness-survey-2015.pdf
- http://www.apa.org/news/press/releases/2015/02/money-stress.aspx
- http://business.time.com/2012/07/19/new-evidence-says-workplace-financial-education-effective/
Joe Saari founded Financial Fitness Group to fulfill his vision of providing accurate, reliable and unbiased financial education and make learning about personal finance investing, easy, effective and fun. His adventures in this space began as a publisher of interactive educational experiences. Joe is a graduate of the University of Wisconsin at Madison, where he earned a master’s degree in business administration in finance and international business.
