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Workplace Financial Literacy:Why the workplace?
Charles R. Schwab chairs the President’s Advisory Council on Financial Literacy. In the Council’s first report dated January 2009, they detailed “The Increasing Importance of Financial Literacy in the Workplace.”
- Many workers today simply do not have the skills, knowledge or assistance necessary to meet their financial challenges.
- When employees are worried about debt and other personal finance issues, they have more difficulty focusing on their jobs.
- Stress, including personal economic stress, is estimated to cost business as much as $300 billion a year in lost productivity, increased absenteeism, employee turnover, and increased medical, legal and insurance costs, according to the American Institute of Stress.
- Financial Literacy Partners, LLC, has calculated that employee financial stress costs businesses $15,000 per year per affected employee.
The situation is exacerbated by the current economic crisis. In 2008, the Society for Human Resource Management (SHRM), the world’s largest HR organization, found in a survey of members that the effects of economic stress are real and growing. In the previous 12 months, members had seen a 26% increase in employees having their wages garnished by collection agencies; a 39% increase in requests for 401(k) plan loans; a 20% increase in requests for pay advances; and a 14% jump in employees reporting having lost their homes.
In a series of online polls taken by Harris Interactive for the American Psychological Association over the past year, the number of respondents citing economic worries as their top cause of stress has continued to rise – from 66% in April 2008 to 82% in November 2008.
Workplace education benefits both the employee and the employer. The availability of financial education opportunities can become a valuable benefit that helps attract and retain the best employees. Employees who are financially healthy are more productive. They are absent less often, spend less time at the workplace dealing with financial crises, and earn higher job performance ratings.
Surveys consistently find that the public feels overwhelmed
and intimidated by the volume of financial information in the marketplace. The result is paralysis – inaction, rather than action.
However, employees appreciate receiving financial education in the workplace because they view their employer as a trusted source,
and because instruction is convenient and accessible. In return, a financially literate workforce is likely to be happier, more focused
and productive, and have learned skills they can apply to their jobs.
The need and demand for that education has been documented. In a 2008 survey of chief financial officers and other senior executives by CFO Research Services and Charles Schwab, 80% of respondents said that financial literacy among employees was the most significant challenge they face in getting employees to participate in the company’s 401(k) plan.
In other Charles Schwab research, employees gave their employers solid marks for providing 401(k) education and for encouraging participation. Respondents to the survey also indicated overwhelmingly that they would like other assistance, including access to financial planning experts, seminars on personal finance, and savings and budgeting tools. Younger employees were particularly interested in how to navigate financial planning for such key life events as purchasing a first home, getting married, and starting a family. Employees of all ages were worried about debt management, including avoiding or resolving credit card debt.
For
more information, contact
Jude Gilford, Owner
Money Awareness Program, LLC
P.O. Box 31022, Tucson AZ 85751
520-400-8304 or Jude@MoneyAwarenessProgram.com
Money
Awareness
Program, LLC
A MAP for Building (and Sustaining) Financial Confidence and Well-Being
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