What if We taught OUR EMPLOYEES about money?
Let’s not think about this from the sheer ‘feel good’ perspective. That’s obvious, too obvious!
Call me new-fashioned, I like to talk about "what-ifs."
What if we had a more Financially Intelligent workforce?
What would your business do differently?
What would shift if more employers moved in this direction?
How would the culture inside your business change?
How might this affect productivity? Retention?
First, let’s explore two statistics:
In 2019, Up to 74% of Americans live paycheck to paycheck, depending on who you ask and when you ask (per recent reports from both the American Payroll Association and the National Endowment for Financial Education.) It would be logical to expect to see this increase because of pandemic influence.
The Average credit card debt in the US for those in their thirties is $5,600, when comparing two different reports by Experian and Value Penguin.
These are both significant facts to consider that are directly affecting employers.
What can an employee do to be productive if they are facing significant financial challenges?
Have you ever been really stressed out about money? I have - here's my story:
I was in my mid-twenties, working as a building manager for a apartment complex in Baltimore. It was a stressful job on a good day.
One weekend, I
got in a car accident. The other car merged into my car as he was changing lanes recklessly. Everyone was fine, but my car was wrecked! I had a big dent, a bent rim, and a lot of scratches that needed painting.
The insurance company battled me back and forth - I was sending a few emails a day to adjusters, claim coordinators, body shop managers and my bank. I lost countless hours of my work time in those weeks to managing this accident.
Then the bill came and I was at a loss for words, it was nearly $3,400.
Did I have $3,400 saved - fortunately, yes.
Did I want my savings to go to fixing a car that was hit by a reckless driver? Of course not.
Yet I was still frantic. I paced my office and felt ill at times. I felt all this pressure - as if I wanted to solve this problem that was looming over me, but had zero power to do so.
In short, it was paralyzing me and affected every aspect of my life.
I was stepping out of work. I was caught staring out the window, riddling myself over what steps to take. And I was trying to do all of this while being car-less, which if I hadn’t been a property manager of a high rise building, would have further exacerbated my ability to concentrate and be a meaningful employee.
WHEW!
And my situation pales in comparison to many day-to-day problems people face.
The stats say that most Americans live paycheck to paycheck, which means that when you stop the flow of cash, there’s an immediate rippling to future debts and ability to recover. A recent Bankrate Financial Security Index survey found that,
"Nearly four in 10 Americans (37 percent) would borrow money in some capacity if hit with an unexpected bill."
So Aaron - What does this have to do with work, employment, and improving the culture in my office?
There are three changes that could come from Financial Education in the workplace:
Reduced Credit Card Debt
Higher Home Ownership
Reduced Retirement Borrowing
I can’t say that these would change. However, I certainly would bet on the fact that it contributes to positive changes overall if workplaces, by majority, could enable this kind of education and reform. These changes could help towards reducing financial inequalities that are present and more obvious now than even 9 months ago.
We see a 67% reduction in financial stress of employees after going through our Financial Stability and Financial Wellness trainings and online programs.
Reduced Credit Card Debt
This isn’t about reducing debt by creating better debt management strategies. That’s for another conversation.
This is actually about helping your employees develop good money habits. The truth: Money habits are hard to develop. They take time.
Like every bad habit, it is often easy to start. You might not even notice the excuses you tell yourself to justify your actions - or inactions. Once it gets a hold of you it can seem impossible to change.
The power of financial education then, as people migrate into Financial Stability, is to help them develop the habits as they are making choices and discovering what money can do for them.
If you can imagine finally having access to cash, what some would consider disposable income (I absolutely despise this term), it’s then that guidance and education is most essential. Yet, we abstain from giving our newly minted adult employees access to the guidance they need most. These bad habits, whether they stem from spending to cover insecurities or spending for the rush of new ownership, all boil down to behavior.