Beyond the 401(k) training: Empowering employees with financial literacy
Less than two-thirds of Americans are financially literate, which is why employers need to go beyond retirement education and give employees the resources needed to help them feel more financially stable, says a new poll.
Most of us would likely consider ourselves to be financially literate. But really, how honest are we being?
An Ipsos poll conducted on behalf of Money Masters finds that the average American rates themselves as moderately financially literate. However, when comparing self-reported financial literacy to the results of a financial literacy quiz, a segment of the population was discovered to be overconfident in their financial prowess. The quiz covered concepts such as risk diversification, inflation, numeracy, and compounding interest. This poll was conducted on behalf of Money Masters between September 3-9, 2021.
The average American rates their level of financial literacy as a 6.2 out of 10. Roughly one in four that consider themselves financially literate were found not to be, based on the results of the quiz.
The poll also found differences in financial literacy among the demographic categories of age, household income, and education.
Demographic findings revealed–
- Boomers, Gen X, and millennials all rate themselves as being more financially literate than Gen Z.
- Those who have a college degree believe themselves to be more financially literate than those without one.
- Americans with higher household incomes compared to those with lower household incomes believe themselves to be more financially literate than those without one.
- Americans with a college degree are significantly more financially literate than those without one (74% and 55%, respectively)
While the majority of Americans are financially literate, a sizable chunk are not. Just shy of two-thirds of Americans (64%) are financial literate, one third (36%) are not.
Financially literate Americans by age –
- Baby boomers (71%)
- Gen X (63%)
- Millennials (59%)
- Gen Z (42%)
Alicia Garcia, the chief culture officer at MasterControl, believes companies can play a vital role in increasing employee financial literacy and well-being by going beyond 401(k) training.
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“Receiving company stock is really only beneficial if you know what passive income is, how it impacts taxes and how to manage shares,” she said. “That’s why MasterControl holds monthly town halls where employees can ask questions to get educated on financial topics.”
Garcia believes this will lead to increased employee retention and job satisfaction, as employees will be more invested in the company’s success due to a better understanding of the financial benefits they gain from the company’s growth. Offering financial literacy options to employees is not only a great way to improve their financial literacy for themselves, but also for the betterment of the company.