Remember this movie from 2006? Looks like the “failure to launch” group is coming back around. According to recent data from Trulia*, nearly 40% of young adults lived with their parents, grandparents, step-parents and other relatives last year. This is the highest point in 75 years.
As Human Resource professionals, can we help reverse this trend? I believe we can, as many of us are starting to recognize the importance of financial literacy in the workplace. When employees manage their money well, everyone wins.
Financial literacy is the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial well-being. For many young professionals, they are not receiving a financial education. According to the National Council on Economic Education, only a handful of states requires students to complete a personal finance course in school.
That’s why work is becoming a place to provide education as employees experience life events: home purchases, retirement planning, family changes, and health changes. Using the workplace as a financial education classroom is a tremendous opportunity to increase productivity, engagement, and loyalty.
A report by the Personal Finance Employee Education Foundation clearly provides a business case for financial literacy programs in the workplace:
- 30 million workers — one in four are suffering serious financial distress.
- Nearly half of those who are financially distressed report that their health is negatively impacted by their financial worries.
- 30% to 80% of financially distressed workers spend time at their place of employment worrying about personal finances and dealing with financial issues instead of working.
Employers have an opportunity and a responsibility to educate workers at all levels about financial literacy. The sooner an employee understands and applies the basic principles of financial literacy, the easier it is to achieve financial security.
There are several steps you can take to help employees become more financially literate. The first step is to put the right programs and systems in place. Becoming financially literate means understanding how to manage your income and expenses, handle debt responsibly, save and invest, and prepare for the unexpected. The more prepared employees are to adapt to changes in their financial lives, the more financially fit they will become.
Companies that implement financial literacy programs realize a return on their investment. While on the surface, this appears daunting to implement, employers have a strong incentive because of the strong correlation between financial stress and an employee’s productivity. Remember, most plan providers offer this service for free.
Financial literacy isn’t something that happens overnight. It takes time and effort. Making sure your employees get good information is the first step.
Tom Sheehan brings 20+ years of extensive, broad-based strategic, tactical and practical HR experience to CAI’s Advice & Resolution team. He advises HR and other business leaders on talent management, organizational effectiveness, employee engagement, M&A’s, and employee relations.