Helping employees improve financial skills can pay off

Employers that foster “finpowerment” through financial education benefits can help their workers take control of their money and achieve financial goals – which can also boost their productivity and the company’s bottom line.

Jeremy Beament, co-founder and director of nudge Global Ltd., discusses the findings of the UK-based company’s 2022 Global Financial Wellbeing Report, “Can We Connect? How financial empowerment will save the employer-employee connection,” that highlight the critical need for employers to offer financial education benefits to their workers.

BenefitsPRO: How does money – or the lack of it – greatly impact personal happiness and mental wellbeing?

Jeremy Beament: Since money touches every part of our lives, financial shocks impact people deeply. Over the past two years, these shocks have been coming thick and fast. Covid, inflation, armed conflict, market volatility – and now recession looming on the horizon. The nudge Global research found that more than two-thirds of Americans currently feel ashamed, angry and depressed about their finances.

As a result of these factors and lack of financial support, many of those surveyed are postponing important life milestones, such as purchasing a home or having children. The ability to achieve these types of goals has a substantial impact on people’s behavior, and postponing major life events can understandably affect people’s wellbeing.

But with workplace financial and benefits education, the need to cancel or postpone these goals can be averted. Instead, with the right support people can achieve their life goals. The research showed that employees would most like their employers to help them develop better financial skills to grow their savings account (37 percent), save for retirement (36 percent), and purchase a home (25 percent).

In return for dedicated, meaningful work, employees want their employer to support them through key life moments. Nearly two-thirds (61 percent) of respondents said that having diverse benefits, like financial education support, helps to build commitment to their employer. Yet, the research revealed one-third of US workers surveyed don’t understand how their workplace financial benefits work.

Are there differences around finances between men and women?

In addition to financial stresses weighing heavily on the global population, the pandemic has exacerbated financial inequities between women and men. For example, women were three times as likely to leave jobs in order to prioritize other responsibilities, such as caring for children or other family members, according to the Pew Research Center. It’s easy to see why the research found that men were much more likely than women – 83 percent vs. 66 percent – to feel hopeful about their current financial situations.

The results of these inequities will reverberate through people’s lives for years to come. The fact that women are insecure and less hopeful in their finances isn’t surprising – it’s the result of wider complex gender pay inequities.

Employers have a unique opportunity to step in and ease this financial pain. The meaning of “finpowerment” is the way employers can empower their people to feel confident and in control of their money through financial education. This, in turn, significantly contributes to overall wellbeing. Individuals can’t control macroeconomic factors that cause financial and emotional stress, but finpowerment can help people take control of their money and achieve financial goals.

How can offering financial education benefits make a difference?

Where employers offer financial education benefits to their people, employees are 24 percent more likely to feel connected with their employer and 20 percent less likely to feel anxiety about their finances. That’s because financial education creates the opportunity for employers to help their people learn how to control the things that are within their power: economizing, growing money through investment, and increasing savings, so they can achieve those milestone life moments.

Over half (59 percent) of all employees surveyed believe their companies view employees as interchangeable and replaceable. These feelings of disconnection can contribute to dissatisfaction, productivity issues and increased employee turnover.

The opportunity for employers is clear. Helping employees improve their financial health, through skills and knowledge to achieve their life goals at a time when they need it most, builds trust and understanding of their financial situation. When employers enable their people to be financially empowered, they can sustain long-term connections that have significant benefits for businesses and individuals.

Additionally, young, high-earning employees – those aged 16 to 34 who earn $92,000 or more per year – felt significantly more connected to their employer when they received financial education benefits. Specifically, 66 percent felt connected to their employer compared to 43 percent – so young people are 24 percent more likely to feel connected when they receive financial education benefits. Furthermore, 35 percent of young, high-earning employees with access to financial education benefits trust their employers, compared to just 15 percent of those who do not receive financial education benefits.

Reciprocal, enduring relationships come from a two-fold, holistic investment. Employers must provide for an employee’s short-term needs, including health care and pay, as well as their long-term needs. Teaching people the necessary financial skills to build creates a more financially and emotionally resilient employee.

For employers, improving financial education means taking a broader interest in them as a person  – as well as their family and dependents –  and their unique situation. That’s an authentic connection – the kind that can increase their employees’ commitment and in turn, engagement and productivity.