Financially Educated Employees Make Better Employees
By Rick Imhoff, CFP ®
Taking the time to educate employees about personal money management can not only benefit employees but can benefit the employer too. If employees are dealing with financial issues, they may not be focused fully on their job, possibly leading to a drop in productivity and an increase in absenteeism. From an employer’s perspective, the bottom line is negatively impacted.
Employers who offer a retirement plan, like a 401(k) plan for their employees generally provide educational sessions to help encourage greater participation in the plan. Though this is helpful, it fails to deal with more in depth financial issues that may affect plan participation as well as worker productivity.
Research conducted by Virginia Tech’s National Institute for Personal Finance Employee Education indicated that about 15% of the workers in the United States experience a certain level of stress with their personal financial situation which can reduce their productivity. The same research showed that the percentage may be as high as 40 or 50 percent in some companies. They estimate that workers waste 24 hours on the job every month dealing with money problems.
At first glance, it may seem that higher wages may help the situation. That may be true, but the real issue is more about how employees handle their wages, regardless of the amount. Unfortunately, our formal schooling provided little to no education on how to manage money resulting in many employees not knowing how to budget, save, or invest. This lack of knowledge can lead to higher levels of debt, inadequate savings to cover an emergency, running out of cash before the next pay period, and overall experiencing a high level of stress.
On the positive side, employees who properly handle their spending, minimize debt, save for short term needs or emergencies, and invest for long term goals like retirement, feel better about their financial situation. This typically results in a more productive, loyal, and positively motivated employee who is not distracted by financial issues.
Many employers have probably offered a health fitness program to help employees lead more healthy lifestyles and reduce health care costs. The same approach can be applied to financial education by simply offering workshops, seminars, or even one-on-one consultations with a financial planner to provide at least some fundamental financial education and cover not only investing, but other employee benefits, credit, debt management, budgeting, and other financial planning topics.
This is a service we offer through our Wealth Management Group and we would be happy to discuss how it may benefit you as an employer or employee.
Rick Imhoff, CFP®, is Executive Vice President & Senior Trust Officer for MidAmerica National Bank. He can be reached at 309-647-5000, ext. 1130 or by email.
Investments are not FDIC-insured, hold no bank guarantee, may lose value, are not a deposit, and are not insured by any federal government agency.