According to a recent Workplace Benefits Report, 40% of millennials said they left high school and college unprepared to manage their finances and need help with topics across the financial wellness spectrum, including saving for retirement (43%), general savings help (40%), paying down or managing debt (34%), saving for major expenses (36%) and budgeting (31%). The report also found that:
- 43% want more help with investing
- 40% want more information on how to do their taxes
- 21% want more help with saving for a home
- 18% want help with their student loans
At varying points in our lives, we inevitably encounter situations that require some financial literacy in order to make sound economic decisions. We ask ourselves questions like:
- Should I use extra cash to pay down debt or invest toward retirement?
- How much should I save in my 401(k) plan, and where do I invest it?
- Should I rent or buy a place, and how much do I need to put down?
- When can I afford to retire?
The problem is that millennials grew up learning how to be really good at passing a standardized test. Rather than a curriculum filled with budgeting, tax savings, credit scores, or compound interest, millennials grew up in a fantasy land of parallelograms, quadratic equations, and a2 + b2 = c2 . They are taking their first shaky baby giraffe steps in the real world, and the real world is hitting them hard.
The Economic Impact on Employers
When we look at this from an employer standpoint, financial ignorance is not only expensive to the individual, it’s impacting employee health and productivity. Think about what kind of personal problems are floating around your office right now: marriage issues, kids misbehaving, health concerns, the air conditioning going out in the Florida summer heat, caring for elderly parents. Add money worries to the long “Personal Problems Employees Bring to the Office” list. Focus is diverted. Ingenuity is stunted. Employer frustration increases.
In fact, a recent study released by Mercer found that employees spend an average of 12 work hours each month focused on financial issues, over 53% of employees are stressed out about their finances, and this accounts for the $250 billion a year in lost wages due to employees’ stress about their personal finances.
4 Tips for Improving Financial Wellness
Based on the high correlation between financial stress and lower levels of productivity and retention, high levels of absenteeism, and higher healthcare costs, the following 4 tips for employers focus on impacting the company’s morale and bottom line with a grassroots approach.
Start With the Why
It’s not about what you’re working for or what you’re saving for (the house, the car, the vacation, the avocado toast) or how (the budget, the cheap coffee, the thrift stores)… It’s about the why, and the why looks different for everybody (kids, identity, freedom, exploration, security, prestige).
Rather than getting people to think of a restrictive budget, if you can get people to start thinking from a value-based mindset on why they are saving their money and what money can do for them as a tool, you’ll start planting seeds of meaning. They’ll start connecting the dots and have more meaning showing up to work each day with a vision of why they do what they do to earn a living.
There is No One-Size-Fits-All Approach
Nearly half of employees want employers to bring in a financial expert that can offer a personalized financial strategy and nearly half want tailored training specific to their age group. BKS Partners highly suggests putting together a wellness committee within your organization that can assemble a wellness calendar that includes financial wellness. Many times credit unions, financial advisers, 401(k) providers, employee benefits brokers, and banks have a curriculum and working capital to offload these tasks and advice to an external resource. All you have to do is ask.
Take the Match
According to the 15th annual Retirement Survey by the Transamerica Center for Retirement Studies, 81% of Millennials fear that when they turn 65, Social Security has the same chance of existing as Blockbuster Video, and are not planning for it to be there for them when they retire. For this reason, benefits are particularly appealing to Millennials – 90 percent of employees 18 to 34 years old say they would prefer benefits over pay.
While offering ‘fun perks’ such as ping pong tables, happy hours, and stocked snack corners can be gratifying in the short-term, top candidates are focused on long-term benefits. Many are evaluating a company’s 401(k) offering when choosing which companies to apply to or deciding between multiple job offers, and 67% of Millennials would be likely to leave their current employer for a similar job offering a better retirement benefit.
Take the Taboo Out of It
There are three things Americans don’t talk about: politics, religion, and money; a familiar statement many of us have heard since we were children. It seems we’ve done a good job of taking this advice to heart, especially when it comes to the topic of money. According to a Wells Fargo survey, 44% of Americans find personal finance to be the most difficult subject to talk about, even more than politics, religion, and death. I have a theory that people are stressed about finances because they feel they can’t talk about it, and I believe most of all, employees want personal advice when they need it. In this climate, employers and benefits providers are increasingly expected to help employees improve their financial wellbeing, with financial wellness programs a key component in these efforts.
Call To Action
The bottom line is that your company’s success is tied directly to the quality of its workforce. Giving your employees top-notch, thoughtful benefits, like a 401(k) and access to financial wellness, is a great way to ensure they’re happy, remain loyal to your company, and are engaged in the company’s success.
Learn more about the BKS Partners approach to creating a culture of Vitality here.