Financial literacy is the ability to understand and manage your money effectively. It can help you achieve your personal and professional goals, reduce stress, and avoid costly mistakes. As an employer, you can use benefits to improve your employees' financial literacy and enhance their well-being, loyalty, and productivity. Here are some ways to do that.
One of the most direct ways to improve your employees' financial literacy is to offer them financial education. This can include workshops, webinars, online courses, newsletters, or podcasts that cover topics such as budgeting, saving, investing, debt management, retirement planning, taxes, and insurance. You can also provide access to financial coaches or advisors who can give personalized advice and guidance. Financial education can help your employees gain confidence, skills, and knowledge to make smart financial decisions.
Providing financial literacy can be included in the onboarding package. When employees choose direct deposit, employers can give tips on savings such as setting up a separate savings account for emergencies and future large expenses while having the remaining paycheck go to a bill payment account. This will also require the employer to give the option to add multiple accounts for direct deposit.
Improving employees' financial literacy can have numerous benefits for both the employees and the organization. Here are some strategies that involve leveraging benefits to enhance financial literacy among your workforce: Offer Financial Education Workshops: Arrange workshops or seminars on financial planning, budgeting, investing, and retirement planning. Collaborate with financial experts or institutions to conduct these sessions. Include Financial Literacy in Onboarding: Integrate financial literacy training into the onboarding process for new employees. This can set a foundation for responsible financial habits from the beginning of their tenure. Provide Access to Financial Counseling: Offer access to financial counseling services.
Another way to improve your employees' financial literacy is to provide flexible benefits that allow them to choose the options that best suit their needs and preferences. For example, you can offer a cafeteria plan that lets your employees allocate a fixed amount of money to different types of benefits, such as health, dental, vision, life, disability, or wellness. You can also offer a health savings account (HSA) or a flexible spending account (FSA) that let your employees save money for medical expenses with tax advantages. Flexible benefits can help your employees learn how to prioritize, plan, and optimize their spending on benefits.
There are many employers that provide a multitude of benefits but the employees do not take advantage of them. Creating a mandatory review of the benefits with a description of what that benefit is and how it works will allow employees to make informed decisions. In the case of small business that provides SIMPLE IRAs, they should make sure their employees have access to their statements and encourage them to speak to the advisor they set the plan with to come up with investment options appropriate for the employee and the plan.
A third way to improve your employees' financial literacy is to support their financial wellness. This means addressing the emotional, behavioral, and social aspects of money that can affect their mental health and performance. You can do this by creating a supportive and inclusive culture that encourages open and honest conversations about money, reduces stigma and shame, and promotes healthy habits and attitudes. You can also offer resources and tools that can help your employees cope with financial stress, such as counseling, meditation, apps, or games. Supporting financial wellness can help your employees feel more empowered, motivated, and satisfied with their finances.
A fourth way to improve your employees' financial literacy is to reward their financial achievements. This means recognizing and celebrating their efforts and progress in improving their financial situation and reaching their financial goals. You can do this by providing incentives, bonuses, recognition, or feedback that are linked to specific financial behaviors or outcomes, such as saving, investing, paying off debt, or increasing net worth. You can also create a gamified system that uses points, badges, levels, or leaderboards to make financial learning fun and engaging. Rewarding financial achievements can help your employees feel more appreciated, valued, and inspired to keep improving their finances.
A fifth way to improve your employees' financial literacy is to align your benefits with your values. This means offering benefits that reflect and support what your employees care about and what your organization stands for. For example, you can offer benefits that promote social responsibility, such as matching donations, volunteer time off, or impact investing. You can also offer benefits that foster diversity, equity, and inclusion, such as tuition assistance, student loan repayment, or parental leave. Aligning your benefits with your values can help your employees feel more connected, engaged, and proud to work for your organization.
This article highlighted great ways to infuse a financial wellness culture. My add-on would be for leaders to set the example and become first adopters of the programs being pushed. This allows a level of trust and encourages buy in from staff. Money is a taboo topic so it's about understanding the psychology of money and it's impact on productivity and mental health.
Money is very personal. Although fostering an environment that allows for open communication helps employees see they are not alone in their level of knowledge when it comes to finance, there is a fine line to cross of being too involved in an employees financial life. Many employees see their jobs as just a job, not a career. With that belief, they don't want their employers to be too familiar with their financial decisions. However, the onboarding process and benefits enrollment period are opportune times to have descriptions and training and encourage discussions. HR can send out newsletters during certain times of the year to address timely concerns such as saving for the holidays and a downpayment for a home.