You know Easter, spring break, and MLB opening day all usually happen in April, but did you know that it’s also Financial Literacy Month? It kicks off a campaign to bring awareness to the lack of financial literacy among students and adults.
Financial literacy is especially low in the United States. In 2018, FINRA conducted a study asking adults to answer five questions about financial literacy. In the U.S., 66% could not answer more than three of the five questions correctly.
See why financial literacy is important for your employees and how you can empower them to improve their financial fitness.
What is Financial Literacy Month?
First, what is financial literacy? Financial literacy is the collection of skills, knowledge, and tools that help people make individual financial decisions. Some people extend the definition to include financial capability, which also includes the ability to put these skills into practice when paired with access to financial products and services.
Led by the National Jump$tart Coalition, Financial Literacy Month takes place every April to educate children and adults about the importance of financial literacy. The National Endowment for Financial Education (NEFE) first introduced the awareness holiday over two decades ago and was named Youth Financial Literacy Day. In 2000, Jump$tart took over the holiday’s promotion and turned it into a month-long event for people of all ages.
Now, businesses and organizations across the country promote financial literacy through conferences, webinars, and other educational events.
Why is financial literacy important?
Have you seen the meme that says most people know that the mitochondria are the powerhouse of the cell, but few people graduate high school knowing how to do their taxes? There are many life skills that American schools don’t teach us, and financial literacy is one of them.
Just this year, a Bankrate survey reported that 56% of Americans could not cover an unexpected $1,000 bill with savings.
While that number is still shocking, more people were able to cover an emergency expense this year than in the last eight years of reporting. It’s especially disheartening since many people in the previous two years faced such emergencies and are continuing to struggle because of them.
In fact, the National Endowment for Financial Education (NEFE) conducted a survey early this year, and 65% of people said they experienced an unexpected major expense of financial setback in 2021. And nearly half (47%) of U.S. adults said they lived paycheck to paycheck last year.
Our lack of financial acumen isn’t the only reason Americans struggle with financial wellness, but it does play a part.
Beyond personal finances, many financial buzzwords dominate the news these days. Inflation, the federal interest rates, commodity prices… the list goes on. It’s important to understand what these terms mean and how they affect everything from income and home loans to retirement funds and job opportunities.
Why should employers promote Financial Literacy Month?
More and more, companies are investing in their workforce, helping employees in areas beyond immediate job skills. For employees, the benefits are clear.
But financial literacy programs also benefit employers. Here are a few reasons why your company should promote Financial Literacy Month.
Support DEI initiatives
If diversity, equity, and inclusion (DEI) are top priorities for your organization (and they should be), then promoting financial literacy supports these goals.
Despite overall economic growth, many workers faced difficult financial challenges. And some groups were hit harder than others. Black (68%) and Hispanic (59%) adults were more likely than their White (42%) counterparts to say they were living paycheck to paycheck, according to an NEFE personal finance poll.
Women faced similar financial health gaps. Women (13%) reported they were significantly less likely than men (20%) to say their financial quality of life was better than expected in 2021. They were also more likely to report that they’re living paycheck to paycheck than men, at 52% to 43%. Promoting financial literacy helps ensure everyone is well-equipped to manage their finances.
The biggest stressor impacting your employees at work is money. Reducing their stress around money helps them become more productive, reliable, and, most importantly, engaged in their work.
Why is employee engagement so important? It affects employee retention, productivity levels, and even organizational outcomes. And for the first time in a decade, employee engagement dropped in 2021. In a Gallup survey of over 50,000 employees, the ratio of engaged to actively disengaged workers in the U.S. is 2.1 to 1, down from 2.6 to 1 in 2020.
Introducing financial literacy and empowering employees to take control of their finances will have a big impact on employee engagement. Lower stress leads to happier, more engaged employees.
Three ways to financially empower your employees
Not sure where to start? Here are a few ways to promote Financial Literacy Month and empower employees with financial fitness.
Give them access to quality resources
When we conducted our first inaugural State of Employee Financial Health and Wealth survey, we were surprised to learn where people found their financial information. The top three places? Search (44%), media (42%), and social media (36%).
Finding financial advice in places like Google and Facebook is hardly trustworthy. There’s a chance the information they find is false, overly general, or just plain bad advice.
Pull together some trusted resources for your employees. Curate a list of trusted sites, or put together an intranet page with verified information. You can even add a list of service providers to help employees with their financial decisions.
Offer financial training courses
Education is the key to financial literacy. Few of your employees have had any formal training on personal money management. Most have had to learn on their own, to varying degrees of success.
Start with a basic course covering the fundamentals like budgets, compound interest, and investment options. Then give employees access to dive deeper into topics that interest them. At the very least, this will provide your employees with foundational knowledge on which they can start building their financial skills.
Bring in a financial wellness partner
Financial benefits don’t start and end with 401(k)s. Make employee financial wellness a priority by partnering with Origin to develop a personalized program for your team. Employees get a full view of their compensation packages, access to one-on-one meetings with Certified Financial Planners™, and actionable resources for your people.
Celebrate Financial Literacy Month with Origin
Empowering your employees to improve their financial literacy has long-lasting benefits for their families and your business. As we kick off Financial Literacy Month, see how you can partner with Origin to improve your employees' financial wellness.