Does your new employee have a savings account? Does he or she know how to budget a paycheck? These are important questions since the whole reason companies offer a salary and benefits is to make employees feel compensated and valued. If employees don’t know how to manage money or don’t understand the benefits on offer, they’ll be unhappy at work.
Companies that spend a little more time making sure new workers are financially literate can make a huge difference in their employees’ lives, according to a new study by the Center for Public Policy Priorities and RAISE Texas. And employees who manage their money are happier and more productive.
“Financial stress can lead to reduced productivity, distractions in the workplace, absenteeism and, according to some reports, higher employer health care costs,” the study says. Improving those statistics should be the goal of every business, and a little extra training on financial literacy during the onboarding process can make a huge difference for the worker and the company.
“Employer-based financial wellness programs can be implemented into the workplace at low or minimal cost,” researchers found. “They are a unique benefit that help attract and retain employees, reduce employees’ financial stress and support employees’ financial stability.”
The study’s authors recommend:
- Make sure that new employees understand all of their potential benefits, including retirement plans. Employers should automatically enroll workers in retirement plans and only allow them to opt-out after explaining what they are giving up.
- Explain that new employees should split their paycheck between a checking and a savings account. Employees are more likely to build up a financial cushion if the money is not readily accessible.
- Bring in an outside financial coach, such as non-profit counselors from Goodwill, to offer individual advice to each new employee. This may be the first time a worker has had access to professional advice on managing money.
- Let the employee know about the dozens of free resources available to learn more from, including government agencies like the Federal Reserve and non-profit groups like the United Way.
- Offer annual financial check-ups for employees to help them obtain their financial goals. Constant reinforcement is necessary for a life-long behavioral change.