In an uncertain economy, financial literacy training is quickly becoming a hot benefit

Twenty-three years after founding her own company, Amy Power still remembered the feeling of living paycheck to paycheck. CEO of The Power Group, a Dallas-based public relations and crisis management firm, Power wanted to make sure her employees didn’t make the same financial mistakes she made in her twenties. Her 14 employees, most of whom are Millennials or Gen-Zers, needed to know how to manage their long-term salaries, so Power offered them something she wished they had at their age: access to a personal financial manager.

“It takes some of the stress off the employee,” says Power, whose company is on Inc.’s Best Workplaces 2022 list. “If they worry about making ends meet on a daily basis, how are they really going to be focused when they need it?”

Americans are in tough financial times, facing the highest consumer prices in 40 years, investment portfolios battered by a new bear market and growing risks of recession next year. More than 60% of Americans lived paycheck to paycheck in April, up 9% year-over-year, according to research by PYMNTS, an industry publication and vendor of data. A third of people earning an annual salary of $250,000 or more said they had little or nothing left in their bank account at the end of the month.

Americans also lag the rest of the world in financial literacy, with very few people receiving formal education on the subject. In the United States, only one in five college students are guaranteed to take a personal finance course before graduating from high school, according to a 2021 report by the nonprofit organization Next Gen Personal Finance, which offers financial and economic teaching materials for educators. Minority and low-income students are even less likely to take a course in the subject. This means that many young people enter the labor market without knowing how to manage their first salary.

Provide personal coaching

Since Power began offering the financial wellness program to its employees earlier this year, approximately 70% of The Power Group team have participated. The company covers the cost of Life Style Plan, a SaaS software platform that starts at $100 per month per person and includes personal coaching sessions, which typically take place during the workday.

More important than managing a budget, Power sees his team learning how to build wealth early in their careers. “We have to learn this and we have to put it into practice,” she says, adding that the decision to provide personal financial resources seemed like a no-brainer to her. “I don’t know why we as employers haven’t done this from the start.”

About half of Americans have access to retirement savings programs through their jobs, but workers want more than just an employer-sponsored 401(k), especially those early in their careers. Two-thirds of Gen Z workers believe their employers have a responsibility to help improve or maintain their financial well-being, according to a 2022 report from financial services organization TIAA. More than 60% of Millennials agree.

“Younger Americans are more likely to believe that employers have a responsibility to help their employees be well mentally, physically and financially,” the report said. “There is a major shift underway in expectations.”

Relieve financial stress

According to Rebecca Shipley, senior vice president of Daytona Beach, Fla.-based insurance company Brown & Brown, companies are increasingly offering financial planners as a perk to ease the pressure on their employees and improve their focus.

“It’s really part of that notion of wellness and helping an employee be well-rounded,” says Shipley, who has been advising companies on their compensation and benefits for more than 25 years and says employers are now considering more holistically the health of their employees, which includes their finances. Money remains the top source of stress among American workers, according to a recent PwC survey. This stress can hurt productivity, attendance and retention, as financially challenged workers were twice as likely to seek new employment.

Above all, investing in the financial well-being of employees doesn’t have to be cost-prohibitive, says Shipley. His advice for small businesses: “Don’t be afraid to ask your partners to commit. If you have a retirement plan, ask your administrator to come help you.”

Improve financial literacy

HR software provider BambooHR began offering free financial literacy courses through Financial Peace University in 2012, four years after it was founded. The Lindon, Utah-based company has spent $30,000 to offer the FPU course over the past decade, but the training initiates a virtuous cycle, according to Justin Judd, chief financial officer of BambooHR.

“It pays dividends,” he says. “If they put these principles into practice to have financial freedom and peace in their financial life, they will be more productive.” Since 2012, the amount of money saved and debt repaid by the hundreds of participating BambooHR employees totals $2 million.

When new hires start at BambooHR, they also meet with a dedicated financial advisor, who can go beyond retirement planning to discuss any tax issues. The service, which is free for employees, is part of the company’s 401(k) program. Financial health is often overlooked by employers to their detriment, says Judd. “Investing in people and helping them succeed in all aspects of their lives actually helps workers to be really efficient, and that efficiency leads to taking care of good customers, which leads to successful businesses,” he says. .

Efforts to improve the financial health of employees appear to be paying off. TIAA found that workers who participated in financial wellness programs were twice as likely to be financially healthy. At The Power Group, employee participation in the Life Style Plan has already paid off for both individuals and the company. Within the first few months, Power received a text message from her youngest employee, who is working her first full-time job, thanking her. Power says the personal finance training has made his team more focused, creative and adept at analyzing cash flow and income statements. Deciphering business profits and losses and communicating with the C-suite at a high level requires an understanding of your personal finances, says Power.

“I’m trying to create the next generation of business people,” she says. “You need to have the financial chops and the understanding to be able to step into leadership roles in any company, not just mine.”

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