How to Set Up a Financial Literacy Program for Your Workplace
Employers are increasingly realizing that many of their workers lack the basic skills to help them be successful financially–to manage their money, save for the future and make good spending decisions.
And statistics back them up. The Federal Reserve in 2019 reported that 37% of adults lack the funds to cover a $400 emergency. The American Psychological Association published its annual Stress in America study at the end of last year, reporting that 64% of adults identify money as a significant source of stress in their life.
More employers are coming to the rescue and adding an emergency account and financial literacy education as a new benefit for their employees. They are encouraging employees to fund emergency accounts, in some cases by offering them cash and other incentives.
This is happening in part because the COVID-19 pandemic “highlighted how unprepared many Americans are for financial emergencies,” said David Amendola, senior director at consulting firm Willis Towers Watson. Here are some examples:
- In July, KFC’s nonprofit KFC Foundation began offering workers up to $240 over six months to match contributions to an emergency savings account.
- Ascent plans later this year to introduce an emergency savings account from Sunny Day Fund Solutions Inc. with a company-funded interest rate of 17% to 36%, capped at $300 a year.
- Some companies, including United Parcel Service Inc., are letting workers divert a portion of their paychecks into rainy day funds within 401(k) plans.
- T. Rowe Price Group Inc. plans to introduce an emergency savings program later this year to the 5,900 employers that use it as a 401(k) record-keeper. Those choosing to participate will link their bank accounts to an app that transfers what it calculates they can afford to save, based on past spending patterns, to an FDIC-insured savings account.
- Giant payroll processor Automatic Data Processing Inc. is testing an emergency savings tool for clients using a paycard, according to a recent press release from BlackRock Inc., which is developing emergency savings programs with nonprofits, academics and companies.
How can you help your employees improve their financial knowledge and skills, even if you don’t have the means to provide emergency funds for them?
One especially effective way is to offer classes, websites and other training materials. You might consider giving workers time during the week to take advantage of these opportunities and perhaps provide incentives to employees who finish courses.
If your employees want some direction, ask them where they struggle, for example, is it with budgeting, retirement planning or saving for children’s college Sun Group Wealth Partners offers a variety of free financial workshops tailored to your employee needs.Topics include workplace smarts: how to save at work, and have something to show for it when when they retire. We can also provide lessons in the best tips for tackling inflation, sorting through the 401K, Roth IRA and other savings plan options; how to talk with your children about money; how to talk with your partner about money; setting up a family financial first aid kit; building a financial foundation for the next generation; ste[s tp raising money-smart kids, organizing financial records; creating a household budget, and much more.
A second way to help is to provide budgeting tools. Make sure employees are aware of basics like creating a household budget.
Still another way to improve a worker’s financial literacy is through giving good information about retirement plans and college savings preparation. Make sure you prioritize information about your 401(k) retirement plan and other workplace financial benefits.
Consider adding a Corporate 529 plan for future education costs. The plan allows employees to contribute after-tax dollars to an account, which then grows free of federal taxes when used for school expenses.
Finally, it might be worth your time and money to hire a financial advisor to provide classes or meet individually with employees who want one-on-one financial advice.
Having savvy, financially secure employees cuts down on their stress and can pay dividends to you by fostering loyal and contented workers.