Attention employers: According to surveys, a financial wellness program is the number one additional benefit employees want. Not many employees feel financially confident and they crave guidance. You know who’s especially in the dark? Young employees.
That’s the word from Pamela Chan, a researcher with Prosperity Now, a nonprofit working to build financial literacy in economically disadvantaged communities. “I got into this area in law school,” she says. “I was working at a poverty law center focusing on housing reform and realized how so much inequality in the U.S. is because of complexities in financial systems. Everything has a financial transaction or cost to it.”
Chan was kind enough to answer a few questions about financial education in the workplace. Here’s a portion of our chat.
Why do young workers in particular need financial education through work?
Everyone has hard financial decisions to make now and then and could use help, but young people are our focus because of the interesting times we’re in. Young people are very receptive, especially if they’re in the first job where they are financially independent. Older workers tell us often that they wish they had learned more earlier. That was the impetus to for us to understand how employers could support younger workers in their financial lives.
In addition, school is changing. In years past, financial education would be in math or home economics. Students had the opportunity to learn household budgeting and basic financial skills there, but this course is gone in many lower-income, lower-resource schools. In schools with greater resources, financial education is often stock market games and investments, leaving out basic financial skills.
Also, today everything is tied into the financial system. Many daily decisions impact us financially. For example, an employer may offer different health plans with different consequences and a younger employee will need help choosing. There are no really easy financial decisions. In addition to lack of financial education in school, there’s also an additional level of complexity around really basic decisions.
Is it an employer's responsibility to educate young people about financial management? What's the ROI there?
In their 2018 Employee Financial Wellness Survey, PwC found that younger workers definitely have stress around finances. Thirty percent of millennials worry about their ability to meet monthly expenses. Twenty five percent say financial stress impacts productivity; twelve percent say financial stress impacts their attendance. Young people may be working multiple jobs, earning hourly wages and worrying about their schedules. They worry about getting enough hours.
Financial wellness [as a benefit] is still sort of new and we’re still quantifying and qualifying ROI and what success looks like. It may take five more years to decide an economic ROI, but employers are finding it’s an important benefit to wellbeing. It’s part of the employers looking out for employees and that is what’s motivating employers. Employees who’ve had access to it really love it. SunTrust started getting love notes in HR from employees saying they love the program and felt supported by their company.
What's one thing that could financially help all younger employees right now?
The biggest thing younger workers can do is know they’re not alone in terms of managing finances. It can be hard to determine what to save when you may have to help your family or pay down student loans or credit cards. Look around for counselors or coaches through nonprofits. Even if it’s one session or a few, they can help you develop a budget and strategize how to pay off debts.
What fun activity are you looking forward to in Chicago?
At #SHRM18, Chan will be on a panel with leadership from AutoZone, Harvard University Dining Services and SunTrust Bank. Each business has implemented financial wellness programs. AutoZone is working with Prudential, Harvard is working with a nonprofit and SunTrust created a proprietary plan. Beyond the Next Paycheck: Financial Wellness for Young Workers is 11:30 a.m., Wednesday, June 20. Check it out!