Want More Productive Employees? Provide Financial Literacy Education
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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowCould the key to improving employee productivity lie in providing the right kind of financial literacy education within your workplace? Studies and recent human resources trends suggest there is a compelling business case for providing financial literacy programs to your employees.
However, today’s employees also require a different kind of financial literacy education. One that can benefit their entire family by providing employees with guidance on how to educate their children and grandchildren on money matters. An enormous transfer of wealth is taking place now, with the Baby Boomer generation transferring $41 trillion in assets to their Gen X and Millennial children, according to research from the Boston College Social Welfare Research Institute.
Now more than ever, parents and grandparents need to start talking to their children and grandchildren about money. Workplaces can help them do this. Not only can financial literacy education help your employees raise financially fit children and grandchildren, but research suggests it can improve their productivity as well.
The connection between financial stress and employee productivity
Employees who are financially stressed are less productive at work, according to a report by the Personal Finance Employee Education Foundation. The report also shares that 30 million workers – one in four – are suffering serious financial distress, and that 30 to 80 percent of financially distressed workers spend time at work worrying about their stressful personal financial situation and dealing with financial issues instead of working.
Even employees without a high level of financial stress can still benefit from participating in financial literacy programs in the workplace. Imagine an employee who is extremely productive. Now imagine them with an even higher rate of productivity, as well as with higher morale. By simply providing basic financial literacy education to your employees, their productivity is more likely to increase, along with their happiness. Hence why financial literacy can be leveraged as a cornerstone for optimizing employee performance, regardless of their current financial situation.
Financial literacy is becoming a valuable employee benefit
In recent years, human resource professionals have recognized the importance of financial literacy education in the workplace. In fact, financial literacy is becoming a coveted company-supplied job benefit. According to a 2015 study conducted by Aon Hewitt, 93 percent of the 250 employers surveyed said they want to do more to help employees’ financial well-being than just providing 401k matching.
This isn’t the only reason financial literacy education in the workplace is gaining in popularity.
While traditional job benefits help to attract and retain employees, today’s workforce also demands a different kind of benefit: the kind that add value to their entire family.
Just as other conventional company benefits, such as health insurance and 401k plan matching, enhance the overall well-being of an employee’s family, there is an opportunity for companies to provide a unique kind of financial literacy education program to benefit the employee’s entire family too.
Why it’s time for a new type of financial literacy education in the workplace
While employee financial literacy education has gained popularity in recent years, it’s important to bring the right type of financial literacy education to your workplace. Today’s workers require a new type of financial literacy education in the workplace for two reasons.
First, parents aren’t good at talking with their children about money. While 95 percent of respondents in the American Psychological Association’s 2014 Stress in America survey said parents should have more conversations with their children about money matters, a mere 37 percent of respondents said they often talk with their family members about money. By not providing our children with a sound financial literacy education, we are setting them up to be ill-equipped to manage their money as adults.
Secondly, as a society we’re in the midst of the “Great Wealth Transfer,” where the Baby Boomer generation will transfer $41 trillion in assets to their Gen X and Millennial children over the next several decades, according to research from the Boston College Social Welfare Research Institute. This means a tremendous amount money will be put in the hands of potentially woefully underprepared children who are at risk of making poor money management choices with their parents’ money.
Now more than ever, it is imperative parents and grandparents alike talk to their children about money. Unfortunately, the reality is most adults aren’t good at these conversations. Throughout my career as a financial consultant, I’ve found that most don’t know where to start these conversations or what topics they should cover. However, this deficiency can be harmful to all parties. According to Roy Williams and Vic Preisser, the authors of the book Preparing Heirs, 60% of wealth is lost to a lack of communication and trust.
As a parent myself, I realize our greatest mission is to provide our children with tools for success. However, I also realize that solely providing our children with tools and financial resources may not necessarily guarantee success. Rather, as parents, it’s vital we provide our children with knowledge and real-world experiences to draw back on as they grow into adults.
In my personal experience, the right kind of financial literacy workshops help employees reap practical and tangible benefits that haven’t previously been offered in the workplace. Additionally, these types of workshops also pair well with other company-supplied benefits, such as salaries, 401k plans, tuition matching programs and more.
With benefits such as increased employee productivity, as well as a reduction in stress amongst employees, financial literacy education in the workplace may be exactly what you’ve been looking for to improve your workplace culture.
Kyle Sanders is owner of Legacy Consultants Group.