Financial Literacy Month is recognized in April in an effort to highlight the importance of financial literacy and teach Americans how to establish and maintain healthy financial habits.
Lack of money management skills among employees may be a bigger issue than many employers realize. Even more serious is the impact employees’ lack of financial health is having on companies. Just looking at how employees are handling their finances indicates their lack of basic financial literacy. Two out of five Americans (41 percent) don’t have a planned monthly budget and of those who do, one out of four (26 percent) don’t put anything into savings each month.
Without a monthly budget, they most likely aren’t making sound financial decisions. Consequently, they report that they have trouble meeting monthly expenses, making minimum payments on credit cards, haven’t been able to make major purchases they need to make, and don’t have money saved for emergencies. All this leads to employees’ financial stress.
Without proper guidance and education, adults with money issues won’t start making more responsible money decisions and won’t dig out of their financial crisis.
Employers have a role in financial education for their employees. Most employees are struggling financially, living paycheck-to-paycheck and don’t have the financial knowledge or a method to improve the situation.
How can you recognize financial stress in your employees? There are five factors that indicate an employee might be experiencing financial stress:
- withdrawing loans against retirement savings;
- asking for payday advances;
- unexpected absences;
- preventable medical issues (ones that could have been avoided through preventive care but the employee didn’t go to the doctor or other care because of cost); and
- spending time dealing with personal finances while at work.
Employers should not only look for these signs of employee financial stress, but also provide financial wellness education to help workers change the course of their financial behavior and see a positive impact in the workplace.