Help your employees boost their financial IQ this Financial Literacy Month

It’s more than likely that many of your employees are stressed out by their finances. The American Psychological Association published their annual Stress in America study at the end of last year, reporting that 64% of adults identify money as a significant source of stress in their life.

This may be especially true for your younger employees. Those just entering the workforce might be putting together their first-ever budgets and, at the same time, staring at the reality of what it means to make ends meet while handling student loan debt and other pressures.

I want to suggest that you, as benefits and human resources professionals, can help your employees transform their finances from a source of stress to a pillar of strength. The key to unlocking this change begins with promoting financial literacy and supporting programs that build financial inclusion.

We all make financial decisions every day. Having the knowledge to make these decisions confidently can help dramatically improve not just your financial situation but also your quality of life. The day-to-day financial questions—like creating a budget, managing expenses, building up savings—can become less unsettling. From there, financial literacy can make larger life goals such as home ownership and children’s educations more attainable.

Strengthening financial literacy can do more than help your employees. It can also become a support for generational change. Financial decisions that are smart for an individual are generally good for an entire family. More than that, your employees who achieve a level of financial literacy can then help their children learn to manage their own money.

Every April, National Financial Literacy Month offers employers an opportune time to reinvigorate and reassess workplace programs aimed at personal finance. But how do you get started? Here are three steps to consider to help employees boost their financial IQ:

Step 1: Raise financial literacy through retirement plan education.

Prioritize information about the retirement plan and other workplace financial benefits, especially since many financial literacy fundamentals are built into their design.

When your employees participate in these programs, they will not only be heading in the right direction to meet their financial goals, they will also be engaging with critical financial literacy lessons. 

As an example, understanding how interest works is so important, and participating in a workplace retirement plan offers a clear view into the extraordinary power of compound interest.

A terrific way to deliver this information is to compare what it means to contribute a few hundred dollars to a retirement plan every month in your 20s versus putting aside a few thousand dollars each month in your 50s.

It’s startling to see how the numbers play out, and we suggest using dynamic visual aides to help bring the compound interest story to life.

While compound interest can work as a positive lift for retirement savings, the interest that comes with debt can seem more like a roadblock. Some of your employees may be struggling with credit card bills and student loan debt.

Increasingly, employers are thinking about student loan debt as part of their benefits offering, and some are working to build in solutions that help employees understand how interest works for loans while also helping them navigate the complexities of student loan forgiveness.

Step 2: Connect financial literacy with total wellbeing.

Wellness is not just about diet and exercise, it’s about total wellbeing.

Emphasizing the interconnectedness between physical, mental and financial health can help your employees frame their financial literacy journey in familiar terms. In the same way we strive for improvements in other parts of our lives—setting achievable goals and sticking to a program—we can also make progress with our finances. 

During Financial Literacy Month, we are working with many employers to define key financial concepts and outline the steps their employees can take to make smart decisions when managing their money.

Some employers also offer access to financial advisors as part of their benefits program. These professionals can make employees feel more at ease with their finances by addressing immediate concerns while also developing a holistic financial plan. Through personalized, one-on-one sessions, advisors can help take financial literacy to the next level. 

Step 3: Keep financial literacy simple.

A common trap with financial topics is to overcomplicate things. A simple approach is often the best. Some employers will create their own financial literacy content while others get assistance from outside specialists. Either way, make sure the programming is clear, direct and focused. 

Financial literacy should be a lot less complicated than college-level economics, but there are reasons to use strategies from the classroom to keep your employees motivated and engaged. Online quizzes and interactive games can become good fun that reinforces key lessons in a meaningful way. This kind of content might require your employees to make some tough decisions, and being asked to select between several equally compelling choices can feel a lot like creating a budget and managing expenses.

Employers should remember there are benefits to tailoring their programs and offerings to a diverse set of employees, keeping in mind: 

Employees will be starting their financial literacy journeys at different stages. Consider easing into the material to keep employees motivated to engage with financial literacy, not overwhelmed. Money and finances can be delicate subjects, so empathy and understanding can go a long way. 

For employees new to these topics, it can seem especially daunting, so beginning with relatively simple topics like emergency savings funds or retirement plan matches could help establish a solid foundation. At the same time, build some flexibility into your program so that those who are already a little further along don’t disconnect.

Create a two-way dialogue. Just as important as it is to communicate on these topics, employers will want to hear from their employees as well. Encourage your employees to share their questions, concerns and ideas, and, from there, you can focus on the programs that are of most interest and will have the biggest impact.  

We have found webinars to be especially useful over the last 12 months. They have provided a flexible platform for employees to connect with experts and one another around financial topics. Ideally, these sessions will be optimized for mobile to maximize participation and convenience. 

This April is National Financial Literacy Month and presents a great opportunity to connect with employees on some very important topics. With the right programs, resources and approach, employers can help their employees get closer to a “genius” financial IQ score. 

Freda Lee is Senior Vice President at AIG Retirement Services.