Key Questions

Key Questions Topics:

1. What Will a Quality Financial Literacy Program Accomplish for Employees?
2. What are the Top Ten Financial Behaviors?
3. How Can Employers Help Employees Improve Their Personal Financial Behaviors?
4. Where Should an Employee Financial Education Program Begin?
5. Should Financial Education be an Employee Benefit?
6. What Communications Strategies Should Be Used to Motivate Employees To Develop Positive Financial Behaviors?
7. Will a Quality Financial Literacy Program Improve the “Bottom Line?
8. What Is PFEEF’s Mission?

1. What Will a Quality Financial Literacy Program Accomplish for Employees?
A quality financial literacy program should help your employees practice good financial behaviors. Over time these behaviors will result in positive changes in their financial lives. The changes include increased assets, decreased liabilities, increased net worth, reduced financial distress, and improved financial wellbeing. As a result they will be better able to reach their financial goals including a successful retirement. A quality workplace financial program should provide employees access to help with their overall financial fitness at every stage of their careers. This helps employees live better financial lives as well as maximize savings for retirement. People can get ahead financially only by sacrificing some current spending to save and invest and by practicing good financial behaviors.

2. What are the Top Ten Financial Behaviors?
There are many good personal financial behaviors but the most fundamental truth is that one must spend less than one earns, thus sacrificing some spending to invest for one’s future. Additional good financial behaviors include: Establishing measurable financial goals and realistic plans to achieve them; Building and maintaining an emergency fund equal to three months of take-home pay; Using a budget to control spending for regular and irregular expenses; Maintaining adequate insurance for property, liability, life and health exposures; Paying credit card charges in full every month and keeping non-mortgage debt payments below 15 percent of disposable monthly income; Saving for retirement through an employer’s tax-sheltered plan at least the amount required to obtain the largest matching contribution and with a Roth IRA account if an employer’s plan is insufficient to achieve a secure retirement; Leaving retirement money where it belongs in retirement accounts prior to actually retiring; Recognizing that the closer one is to a financial goal that less risk should be taken, and conversely; Preparing, and updating as needed, a will, advance directive documents and beneficiary and ownership designations on all financial accounts.

3. How Can Employers Help Employees Improve Their Personal Financial Behaviors?
Many employees realize that they have some financial behaviors that need changing. To succeed they must believe that they can successfully change those behaviors, and they must have a plan to change. Employers can help by giving employees easy access to quality financial programs. Such programs go well beyond simply explaining an employee benefits package and address the key decisions that must be made and how to integrate employee benefits into the broader pattern of good financial behaviors. A great place to begin is to have employees fill out PFEEF’s Personal Financial Wellness (PFW® ) scale to determine their financial wellness scores.

4. Where Should an Employee Financial Education Program Begin?
Financial programs should be based on the level of employee financial distress.  The suggested topics for a quality financial program are listed below. The topics should differ based on employees’ reported levels of financial distress. The financial program provider working with the employer also can help make appropriate decisions about which financial program information should be emphasized with which groups of employees. Their scores on the PFW Scale™ are on a continuum ranging from 1 (overwhelming financial distress/lowest financial well-being) to 10 (no financial distress/highest financial well-being.)
High financial distress/Poor financial wellness (PFW scores = 1, 2, 3, and 4)

• Setting financial goals
• Individual budgeting, credit education, and credit recovery counseling
• Benefits information
• Credit union and bank affiliations providing preferred services to employees
• Coaching in how to begin preparing for a financially successful retirement

Average financial wellness/average financial distress (PFW 5 and 6)

• Benefits information
• Credit union and bank affiliations providing preferred services to employees
• Money coaching on critical wealth management practices
• Tax preparation education
• Mortgage lender education for achievement of homeownership goals
• Insurance education
• Investment education and advice
• Retirement planning education that explains the various components of post-work income and how to continue preparing for a financially successful retirement
• Estate transfer workshops
• Post-retirement financial education

High financial wellness/low financial distress (PFW 7, 8, 9, and 10)

• Retirement planning education that explains the various components of post-work income and how to continue preparing for a financially successful retirement
• Money coaching providing direct education on critical wealth management practices
• Investment advice
• Tax preparation education
• Estate transfer workshops and individual counseling
• Post-retirement financial education

Click here for more information (PDF).

5. Should Financial Education Be An Employee Benefit?
The employer's benefits package is at the very core of financial success for an employed person. Those who make wise choices among benefit options save money, reduce income taxes, and increase retirement savings while securing benefits that genuinely fit their needs. Such decisions lead to better personal money management behaviors that maximize the likelihood of financial success throughout their lives.

However, financial stress and the lack of basic financial literacy are the major reasons why employees do not make wise choices among benefits options. Research shows that 30 million American workers-1 in 4-report they are seriously distressed and dissatisfied with their financial matters. Financially unwell employees do not make the best decisions for themselves regarding retirement planning, pre-tax health and dependent care and other employee benefits.

6. What Communications Strategies Should Be Used to Motivate Employees To Develop Positive Financial Behaviors?
PFEEF is researching how to motivate employees who are not yet ready to take that first step toward a better financial life. The strategies being tested are based on the successful Stages of Behavior Change Model developed and tested by Prochaska and colleagues for more than 30 years. The model can target employees for financial education based on their readiness for change. Click here for more information (PDF).

7. Will a Quality Financial Literacy Program Improve the “Bottom Line”?

PFEEF has sponsored and conducted research that shows the bottom line benefits of quality employee financial education programs.  You can obtain an estimate of these benefits by using the handy PFEEF ROI Calculator™® by clicking here.  You can obtain a more detailed calculation by contacting one of the quality providers featured on the PFEEF website.  A detailed report will use your company’s data for absenteeism, turnover rates, training costs and the PFW Scale™ results for your employees for a tailored made ROI calculation.

8. What is PFEEF's Mission?
Click here for more information (PDF).