Financial facts of life: Teaching employees financial literacy basics can pay off in loyalty

Many Americans live paycheck to paycheck. You have seen the statistics. According to CNBC, 63% of Americans fall into this category. It’s not only entry level workers or those earning the minimum wage. CNBC mentions almost half of those Americans earning $100,000+ fit into this category. Making financial wellness education available to employees is a benefit you can provide that can attract employee attention and make a positive difference in their lives. Let’s not forget people who are happy and less stressed in their jobs tend to stay in their jobs.

Education can be delivered in several ways. Your HR department could do livestream lessons or deliver live training seminars in a conference room. You could produce podcasts or webinars. Your benefits professional might be able to deliver compliance-approved prepackaged training. You could buy training from an outside provider. You could provide education in printed form. Inclusion in your company newsletter is another channel.

Here are 12 topics that should attract employee attention and deliver value.

1. “What benefits does our company provide?” This sounds obvious, but it’s an excellent starting point. Most people know about vacation policies and how health insurance works, but there are many others. Do they know how the 401(k) plan works? Do employees have some life insurance coverage? How many sick days do they get?
2. “How do I save for retirement?” Everyone is responsible for their own retirement. This means you need to save from your income towards the day when your earned income will no longer be there. Social Security is meant to provide a portion, not entirely replace your previous salary. How can you start saving at your workplace? How will the company help you? What else can you do?
3. “How do credit cards work?” When people talk about the difficulty of losing weight, they often joke: “A second on the lips, a lifetime on the hips.” Do employees understand paying off credit card debt works the same way? According to an example in a Nerdwallet article, it will take almost seven years to pay off your outstanding balance if you are making the minimum required payment on your credit card. One year bank CDs are yielding about 5% (as of 12/22/22, Nerdwallet). Meanwhile, the average interest rate on credit cards is 16.27% according to (12/12/22). What are some sensible strategies to pay down your debt?
4. “How so I save money?” Many people find it hard to save because they pay themselves last. Advertising tells us we cannot be having fun if we are not spending money. Immediate gratification comes with a cost. You don’t save or you go into debt. One of the best ways to start saving money is to put some aside as retirement savings, taken as pretax dollars as a payroll deduction. There are other ways.
5. “How do I budget for household expenses? Budgets sound boring. The company where you work calculates their spending on a budget. Comparing actual to projected expenses and making adjustments is how businesses run. The first step is knowing where your money goes. It is not difficult to start analyzing your expenses and taking control.
6. “How do I pay for my child’s college education?” Back in 2012, a study by Pew Research found 94% of parents wanted their children to go to college. In 2021 a Gallup survey found 54% of parents wanted a four-year college education for their children after graduating high school. What are the other options? Whichever you choose, there will be a cost. How can you start saving now?
7. “What does health insurance cover?” Your firm likely provides a good health plan. Employees generally pay a portion of the costs. What does the plan cover? Do employees have a choice of plans during an annual enrollment period? What makes one plan better than another?
8. “What is long term care? How is it paid for?” Your employees might be young and healthy, but their parents are older. Will a time come when they find it difficult to live on their own? What are their options? Can you plan for this expense ahead of time?
9. “How do I save for vacations instead of going into debt? Your company gives vacation time off from work as a benefit. People often want to travel. Children are out of school during the summer, creating a peak travel period when prices go up. How do you budget and book in advance instead of making decisions at the last minute? How do you take advantage of airline miles and hotel points?
10. What is disability insurance? If you are injured and unable to work, there are a couple of safety nets available. Social Security disability benefits are one example, disability insurance is another. How long do the benefits last? How do you qualify?
11. “How to budget for holiday spending?” Gallup estimates American households will have spent about $1,000 on Christmas in 2022. Many families spend much more, bearing in mind the TV ads you frequently see in December advertise cars, jewelry and perfume. You can keep spending under control if you approach it properly.
12. “How do I lower my subscription expenses?” People have subscriptions for everything. Entertainment programming is a good example. Food kits and exercise programs are another. Often we forget or stop using them, but the charges keep coming in. How can you get this area of spending under control?

Related: Empower (inflation-weary) employees as they struggle to save for retirement

These are all topics that should appeal to different segments of your workforce. At a rate of one a week, this list can provide almost three months of weekly education.

Bryce Sanders is president of Perceptive Business Solutions Inc. He provides HNW client acquisition training for the financial services industry. His book, “Captivating the Wealthy Investor” is available on Amazon.