Why every employee benefits program should include financial education

In a few months, employers across the country will welcome millions of new graduates into the workplace. These new employees, as well as others who’ve joined within the past few years, are dealing with a lot – acclimating to professional life, often in a remote or hybrid environment; facing a potential recession that could define the first few years of their careers; not to mention, transitioning into adulthood, perhaps living away from home for the first time, and figuring out how to manage a budget, set up a 401K and navigate health care costs.

Millennials – who entered the workplace during one of the worst economic recessions in U.S. history and are now in their late 20s to early 40s – also have a lot on their plates. Many are starting families – a wonderful, but often costly, milestone. And while homeownership has long been out of reach for many Millennials, that may be changing, with two-thirds saying they plan to buy a home within the next three years.

One of the biggest lessons that came out of the past few years is that leaders need to be empathetic for what their employees, across all generational lines, are going through in their professional and personal lives. As they finalize their benefits programs for next year, leaders should be empathetic to how little financial education their Gen Z and Millennial employees have likely received, and how ill-equipped many are to navigate these periods of transition, especially in a challenging economic environment.

Across the United States, many school systems are flunking financial literacy, which typically provides basic training in budgeting, credit cards, investing and lending. According to a study released by the American Public Education Foundation, two-thirds of U.S. states earned grades of C, D or F for their ability to require or even offer financial literacy coursework. Studies also suggest that those who would benefit the most from financial literacy education are often the least likely to receive it. NGPF’s 2022 State of Financial Education Report, for example, found that only 5% of students at schools where the majority of students receive free or reduced-price lunches have access to financial literacy courses.

Across the board, Americans desperately need a better understanding of how to manage their finances. A report released by the Milken Institute found that just over half (57%) of U.S. adults were classified as “financially literate” when surveyed about basic financial concepts, and that financial knowledge was considerably lower for Black and Hispanic respondents, creating a vicious cycle that allows socioeconomic inequities to persist.

Financial literacy isn’t just about budgets and credit cards, either. According to our 2022 WorkForces Report, just 53% of U.S. employees say they have a good understanding of their total healthcare costs, and 57% have high anxiety about costs beyond what their insurance covers.  Another study found that 6 in 10 U.S. adults with health insurance have gone into debt getting medical or dental treatment.

Because financial, physical and mental health are so intrinsically linked, if leaders want to offer a truly enhanced benefits plan, financial wellness should be part of it. Offering educational materials, such as providing handouts or hosting informational webinars, is a great starting point. But the more relevant, actionable and real companies can make their financial literacy tools, the better. For example, a dashboard that allows employees to track their spending and receive advice for achieving their financial goals provides tangible outcomes that incentivize employees to participate.

Related: Financial wellness: Tailoring a program to specific employee needs is key

For leaders who pride themselves on taking care of their people, financial wellness is no longer a nice-to-have or add-on to a benefits plan; it’s a must-have, especially today. As we saw just a few years ago, when times are tough, a lack of financial savvy can lead to devastating consequences. Job losses in the early months of the COVID-19 pandemic drove many individuals and families into devastating debt and caused them to postpone much-needed medical care. With costs rising and a possible recession on the horizon, the stakes of Americans’ inconsistent financial knowledge are incredibly high. Because employees increasingly expect their employers to prioritize and invest in their wellbeing, leaders have a powerful role to play when it comes to helping close the financial literacy gap.

Jeri Hawthorne, SVP, Chief Human Resources Officer, Aflac U.S.