Money problems? Financial literacy can benefit your business and getting employees back to work

With prices rising faster than wages over the past year, both employers and employees need to tighten their belts. Fortune reports that even more workers (41%) are living paycheck to paycheck than before the COVID-19 pandemic. It makes sense that Americans are increasingly stressed about money — and this can often lead to poor employee mental health and poor business performance for organizations.

Because financial stress can contribute to mental health issues and absenteeism, it makes good business sense for your organization to educate employees about financial literacy—especially those returning to the workforce.

For people who lost their jobs during the pandemic, going back to work will certainly improve their finances. However, they may need extra help making money decisions, precisely because they are not working and may have fallen behind on payments or accumulated more debt.

Allsup Employee Services (AES) helps people with disabilities get back to work. Our clients were among the hardest hit by unemployment during the pandemic. Part of the value we provide is helping them reclaim their financial future. In addition, our parent company, Allsup, is expanding the financial solutions offered to people with disabilities seeking Social Security Disability Insurance (SSDI) precisely because personal and family finances are taking a hit with the current economy.

Our customers are not the only ones struggling with their finances. The rising prices of almost everything make financial problems a hot topic for every American worker. Additionally, employees scored 52 percent on a test of basic financial knowledge, leaving researchers to conclude that many Americans lack the knowledge to make sound financial decisions. A financial literacy program can help employees learn these essential skills. So what are the benefits of such a program? And how does investing in financial literacy help your employees and improve your company’s bottom line?

Reducing employee stress

When employees are educated about finances, their uncertainty about their financial situation can be reduced, which can benefit their stress levels. Employees surveyed by PwC after a financial literacy program reported a significant reduction in stress. The percentage of those who said they were highly stressed dropped from 52.4 to 19.2 after the workout. More than half of participants (56%) said they were now in a better position to manage their finances.

A financial literacy program can help your employees understand how money works and how to make responsible choices. They can learn approaches to paying off debt, creating and sticking to a budget, and saving for emergency expenses or for long-term goals like a home or retirement.

Increase productivity

A 2020 Personal Finance Survey says that workers preoccupied with money problems can spend up to six hours a workday worrying about issues related to their personal finances. Employees focused on their cash flow problems are more likely to miss deadlines (5.8 times higher) and produce lower quality work (4.9 times lower) than their financially solvent counterparts colleagues. The study concluded that increasing productivity is a key reason for organizations to implement financial literacy programs and that “addressing low financial literacy should be a key element of such programs.”

Increase recruitment and retention

In today’s challenging job market, recruiting and retaining employees is extremely important. Running a financial literacy program is an effective way to attract and retain employees. Research by the Financial Health Network shows that while the majority of workers are interested in financial guidance, less than a third of them are currently receiving it. Of particular interest to employees of all income levels are debt-related benefits, such as medical bill audits and negotiations, debt consolidation and emergency loans. Only 20% of workers currently have access to them.

Nearly 75% of employees surveyed say financial benefits are important to them, but few organizations offer a full portfolio. The good news here is that there is room for your company to excel with financial health benefits.

Before your organization creates a financial health suite, be sure to ask your employees what they care about, what pain points you can help them alleviate, and what their long-term goals are. Also, don’t forget that your disabled workers can also benefit from these benefits. Workers who have experienced a life-changing disability may understand more than most the financial impact of their income-earning potential. They are a pool of experienced resources that can give your organization a competitive edge.

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