When Ced Funches started managing budgets as an art director in his 20s, his employer sent him to a financial education class to help shore up his decision-making skills. The class included an overview of budgeting, saving and retirement investing. For the first time in his life, Funches learned about 401(k)s and how tax-advantaged retirement accounts work.
“They were like, ‘This is a great opportunity, your company offers matching.’ I was like, ‘What is a 401(k)?’ No one had ever explained to me what it was,” recalls Funches, now 36 and an entrepreneur and app developer. Soon after taking the class, he opened his first 401(k) account and started saving for retirement.
Funches’ experience is an increasingly common one, as more companies are incorporating financial education into their workplace benefits. A big driver of this movement is the realization that many employees are feeling financially stressed, and the understanding that reducing their stress levels can increase their performance. “Companies did cut back on things like 401(k) matches and other benefits [during the recession], and now it’s bouncing back,” says Julie Stich, director of research for the International Foundation of Employee Benefit Plans.
A 2014 survey by Financial Finesse, a financial education provider, found that 23 percent of employees report “high or overwhelming” financial stress levels, and 63 percent report some level of financial stress. Women under age 30 with young children who earn less than $60,000 were the most likely to report a high level of stress, with 58 percent calling it high or overwhelming.
| Financial Stress Levels | 2009 | 2010 | 2011 | 2012 | 2013 |
|---|---|---|---|---|---|
| No financial stress | 3% | 3% | 16% | 18% | 14% |
| Some financial stress | 64% | 65% | 65% | 64% | 63% |
| High or overwhelming financial stress | 33% | 32% | 19% | 18% | 23% |
| Source: Financial Finesse |
“We found that employees were having high stress levels because of financial issues, and it was impacting their productivity at work and how they got along with their co-workers,” Stich says.
A recent study by the International Foundation of Employee Benefit Plans found that among its 397 members surveyed, 68 percent of employers offer some form of financial education to their employees, with 36 percent launching those offerings within the past five years. Stich explains that those numbers are likely higher than the national average since the survey represents the group’s members, who are already more attuned to the idea of offering financial education benefits.
The most successful programs tend to come from companies that invest more time and energy into them. According to the foundation’s research, companies reported higher levels of success when they invited workers’ spouses to participate; when they first assessed what topics employees needed more information on; and when they devoted a portion of their budget to financial education. Offering customized programs to specific groups of employees, like workers approaching retirement, also increased success.
Meanwhile, the Financial Finesse survey found that factors contributing to high stress levels include lack of an emergency fund, spending more than one earns and debt. Among the employees experiencing the highest levels of financial stress, just 8 percent said they had an emergency fund, and fewer than half reported paying their bills on time each month.
“If you got up this morning and knew you had to go grocery shopping, but your credit cards are maxed out and your car wouldn’t start and you have to think about how to get to work, you’re tense, you might have high blood pressure and sleep troubles,” says Linda Robertson, senior financial planner at Financial Finesse, who leads financial education programs for employees. That kind of financial stress can not only impede your concentration at work, but it can also lead to longer term health troubles, she adds.
Employee programs often include group workshops as well as individual sessions, which can make it easier for workers to address sensitive topics, like credit card debt. In the one-on-ones sessions, Robertson says the discussion is completely confidential, so employees can feel free to share their concerns about debt or other financial challenges. In group workshop settings, she uses a hypothetical man with financial troubles to help educate them, and leads participants through a budget planning session aimed at getting him on track. Employees suggest changes he can make to his budget and savings, and together they explore how he can improve his overall financial picture.
A 2013 Financial Finesse report on the impact of the programs found that within 30 days of participation, 88 percent of respondents had done at least one thing to boost their finances.The most common steps were reviewing asset allocation in a retirement plan, reducing credit card debt and cutting monthly expenses. Over the longer term, those who took advantage of the financial education program were also more likely to use flexible spending accounts and feel more confident about their retirement investments.
If your workplace offers some kind of financial education program, then you might want to consider taking advantage it, since research suggests it can help reduce your financial stress and boost your productivity. Plus, it’s free and paid for by your employer.
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