Research shows that personal finance education has measurable benefits for employees and employers.

Many employers seeking ways to improve employee wellbeing overlook the value of financial literacy. One’s ability to manage personal finances—including paying bills on time, using debt wisely and saving for short- and long-term goals—has a direct effect on one’s well-being and performance at work. Yet a Transamerica Institute report shows that only 24% of employees are offered a financial wellness program.

Full disclosure: Consumers is proud to offer a free financial wellness program to our business members, Consumers @Work. Whether it’s through our program or another provider’s, financial literacy improves lives and productivity. Here’s what the research shows.

Less time spent on personal finances

Nearly everyone spends time on issues related to personal finances, but financially literate folks spend fewer hours doing so. This leaves them with more time for work, family and personal pursuits.

A survey by the Journal of Financial Literacy and Wellbeing shows that in 2021, U.S. adults spent about 7 hours per week, on average, thinking about and dealing with issues and problems related to their personal finances. Over three hours of this was spent at work. In contrast, the most financially literate respondents only spent three hours total per week (including just one hour at work) doing the same. The least financially literate respondents spent “a staggering 11 total hours per week and over 4 hours per week at work thinking about and dealing with issues related to their finances.”

Financial resiliency when faced with unexpected expenses

When the TIAA Institute analyzed eight years of financial literacy data they found that personal finance knowledge and skills makes a significant difference in how people handle an unexpected expense.

“Americans with very high financial literacy are around three times more likely to be able to cope with a midsized financial shock of $2,000 within the next month, have emergency savings to cover one month of living expenses, make ends meet in a typical month and plan for retirement than households with very low financial literacy,” TIAA Institute reports.

Financial literacy makes a three-fold difference when things like car and home repairs, medical expenses and emergency travel unexpectedly arise.

Financial stress affects absenteeism and tardiness

TIAA Institute also identified a link between financial stress and mental health.

“42% of U.S. adults say that money negatively impacts their mental health, and financial stress has resulted in a 34% increase in absenteeism and tardiness,” the Institute reports. “Employees who are financially stressed are also five times more likely to be distracted by finances while at work. Financially stressed employees also miss about twice as many days each year compared to their unstressed counterparts.”

The TIAA data suggests that employers who help workers improve their financial literacy can help reduce worry about personal finances as well as increase productivity.

Financial literacy is needed across the board

Advanced degrees do not protect workers from financial stress, even doctors experience stress of financial origin. In fact, “financial stress is a widely recognized element in physician burnout,” writes Hilary McLafferty, MD, FAAP for the American Board of Physician Specialties.

Providing employees with personal finance education can help reduce their stress, improve their financial stability and help them feel more financially secure overall. If you’d like to bring Consumers @Work to your employees, call us at 800.991.2221.

 

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