Financial Education: What do Employers Owe their Employees?


According to PwC’s financial wellness survey of 2023, 60% of full-time employees are stressed about their finances. That figure is even worse than it was during the pandemic. The situation is so bad that 47% of employees earning $100,000 or more a year answered that they, too, were stressed about their finances [1].

44% of full-time employees say inflation has had a major or severe impact on their financial situation over the past year, 49% find it difficult to meet household expenses on time each month, and among employees carrying credit card balances, 44% say they struggle to make minimum payments on time each month [2].

The numbers are startling, and not just in the US. In Ireland, 81% of employees say they find money matters stressful [3].

It’s the paradox of money. It makes the world go round, is utterly pivotal to our ability to live with dignity, and yet it’s forever been a taboo. We should not talk about money. It’s poor etiquette socially – perhaps understandable – but even in our work environments the general consensus is that our employer gives us a salary, which every year or so we may renegotiate, but outside of that the topic should be avoided.

But to resuscitate financial health from its current flatline, that needs to change. Research commissioned by Bank of Ireland revealed that 88% of young people learn financial literacy and money management skills predominantly from their parents. Only 57% said they learned from teachers and 25% from online resources [4].

The disadvantages of that are obvious. If one’s parents – who likely were not given a financial education themselves – are not financially literate, their flaws will be passed down.

Ireland’s financial literacy score sits at 54%, well below neighbours and allies like the UK, Germany and Denmark. Troublingly, the 18-34 bracket scored lowest on financial literacy (48%), with over 65s scoring highest (58%) [5]. Sure, part of that boils down to life experience, but it also signals that this is an issue that is not going to resolve itself any time soon.

Cause for concern, too, is that women’s financial literacy scores were almost 10% lower than men, figures which are reflected internationally. A Swedish survey raised the issue of “stereotype threat”, meaning that as a result of women believing that their gender was worse at handling money, they in turn made worse financial decisions. The survey showed that amongst girls aged 13 to 15, financial literacy deteriorated as stereotype strength increased [6]. It takes active steps to reverse the trend.

Financial wellness programmes

Liz Davidson, Financial Finesse founder and CEO, says that, “Employee financial stress is at the greatest level it’s been since the Great Recession” [7].

She suggests the only way to combat this is for companies to adopt employer-sponsored financial wellness programmes. They’re no longer simply nice to have, she says. They’ve become an “imperative.”

The BrightPlan Wellness Survey of 2022 found that financial wellness programmes were now the number one most-wanted benefit among employees, more so than mental health initiatives or time-off programming [8].

And yet, a Transamerica Institute report found that while 77% of workers view financial wellness programmes as an important benefit, only 28% of employers offer them [9].

One positive is that the stigma around such programmes seems to be dampening. PwC notes that when it started its annual financial wellness survey in 2012, only 51% of workers whose employer offered financial wellness services had used them. By the 2023 survey that number had risen to 68% [10]. Just 33% of employees now find it embarrassing to ask for guidance or advice regarding their finances, compared with 42% in 2019 [11].

Among workers who have even attempted to estimate how much money they will need to save in order to retire, a recent report found that 45% simply “guessed” the amount and only 29% have a written plan for how to achieve it [12]. The situation can’t be fixed fast enough.

How to approach financial wellness programmes

Elements of financial education that companies should be focusing on include budget and savings planning, how to create attainable financial goals, property advice and mortgage options, retirement projections and planning, investment education and debt management [13].

Billy Hensley, CEO of The National Endowment for Financial Education (NEFE), argues that it is pivotal employers offer a “personal finance ecosystem” [14].

“Single, tactical solutions cannot work by themselves,” he says. “If it was just about more money or more education, we would’ve solved the problem already.”

The ecosystem approach means that rather than adopting a blanket approach for all employees, employers take the time to consider each of their employees’ unique circumstances – their financial knowledge, cultural influences, socioeconomic status, mindset, overall physical health, where they live etc. – and then tailor the advice accordingly.

Speaking to the Irish Times, Stephen McCormack, senior director and head of financial planning at WTW, agrees. “It can be far more beneficial for employers to provide one-to-one advice sessions with an external adviser to allow employees to discuss their personal situation, confidentially, to get to the core of their financial distress,” he says [15].

“This will enable them to identify the issues, put a plan in place, specific to their needs and objectives, and monitor the progress on an ongoing basis.”

TIAA’s financial wellness survey from 2022 found that employees who have participated in an employer financial wellness programme are twice as likely to have a high financial-wellness rating than those who are not offered the resources or do not participate [16].

54% or participants of such programmes were confident they would retire when they want, compared to 32% of nonparticipants. While 50% of participants were confident they will not run out of money, compared to 29% of nonparticipants [17].

The benefits for employees, then, are stark. But employers, too, gain massively from ensuring their staff are financially literate.

Employer benefits

According to a 2018 Financial Health Network Survey, almost three-quarters of workers with high financial stress said it distracts them at work [18].

56% of employees who suffer distraction at work due to financial stress say they spend three or more work hours a week dealing with or thinking about issues related to their personal finances [19].

A TIAA Institute and the Global Financial Literacy Excellence Center (GFLEC) report from 2023 found similar results, saying that employees spend an average of eight hours a week dealing with financial issues, with four of those hours occurring at work [20].

This level of stress and distraction costs employers money.

A 2023 study in the Journal of Financial Literacy and Wellbeing found that a well-designed financial education programme can remove at least one hour per week of worry and financial distress for each employee who participates in that programme [21]. Assuming a minimum wage of $15 per hour, at a company with 30 minimum-wage employees, a good programme can recover at least $22,500 of value per year [22].

“Organisations have every reason to want their employees to be financially aware. A well designed employee financial wellness programme can help employers reduce a key barrier to productivity and motivation in the workplace,” says McCormack [23].

Not only does keeping employees financially literate eliminate a key distraction and increase staff productivity, but it aids massively with retention.

Only 54% of employees who are financially stressed feel there is a promising future for them at their employer, compared to 69% of employees who are not stressed about their finances. Financially stressed employees are also twice as likely to be looking for a new job as their unstressed colleagues (36% versus 18%). And 73% of financially stressed employees say they would be attracted to another employer that cares more about their financial well-being [24].

The aforementioned Financial Health Network Survey from 2018 found that 60% of people said they’d be more likely to stay at a job if their employer offered financial-wellness benefits [25]. Such initiatives shouldn’t be viewed as “charity” from an employer standpoint, says Annamaria Lusardi, a senior fellow at the Stanford Institute for Economic Policy Research (SIEPR) and founder and academic director of GFLEC. Instead, they should view it as a way to “retain and attract workers and make them more financially healthy and productive” [26].

Employers are often reluctant to engage in such initiatives because they’re viewing these programmes purely through the lens of taking cash out the tin. But the return on investment is clear. On average, employee benefits cost employers between 30–40% of the average worker’s base salary [27]. It’s worth investing the time and money to make sure that cost is contributing to your business.

Moving forward

Money is an awkward subject. The adopted wisdom is that it’s best not to talk about it. We inherit certain financial skills from our parents and just have to hope that we’re lucky enough that that will prove sufficient. But it’s not. Employers have an obligation to ensure their staff are financially literate. That means teaching them about key areas in which they can make improvements, such as budget and savings planning, financial goals, property advice, retirement projections, investment education and debt management – and tailoring that advice according to each individual’s circumstances. Not only is it the right thing to do, but it offers benefits to the employer in terms of staff productivity and garnering company loyalty.

The stigma around money is shifting. It’s time for employers to play their part in helping the pendulum swing.

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