Employees who can’t manage their own money won’t know what’s at stake when it comes to your manufacturing business. By teaching your employees about finances, they’ll be more in tune with your daily operations and will help you increase your bottom line. Here’s why.
Financial Literacy Is at an All-Time Low
Everyone wants to make smart financial decisions, but sometimes they’re unable to do so because of a lack of education. The state of financial literacy is worrying, according to statistics:
- Two out of three families don’t have an emergency fund.
- 53% of adults are worried about their financial situation.
- Three out of five adults don’t know how to manage a budget.
- 78% of Americans live paycheck to paycheck.
- 60% of Americans have some amount of credit card debt.
- Four out of five young people failed a financial literacy quiz.
While it’s true that the pandemic and wage stagnation makes financial stress worse, a sudden influx in wealth makes people better spenders, not savers. Investing is an important tool for financial literacy, but most Americans aren’t knowledgeable on where to start.
But why should it matter that your employees can or can’t manage their money?
The Benefits of Educating Your Staff About Finances
Improving your employees’ grasp on finances benefits your business in several ways, both directly and indirectly. Here are three reasons why you should teach a finance class right now.
Teaching Your Employees Life Skills Is a General Net Positive
Knowledge is power, and money knowledge can severely impact your employees’ future. In fact, simply learning more about a subject, any subject, improves organizational agility, enhances communication skills, increases critical thinking skills, and supports growth and development.
Financial literacy affects every single part of our lives, from birth to death. When your employees are taught the value of saving, they have a greater chance of retiring early, leaving something for their family, and living a better life. All of these metrics lead to happier, healthier employees.
Money Stress Affects Your Employees’ Health and Happiness
Money stress leads to poor productivity, more sick days, and a high turnover rate. Financially illiterate employees are more likely to create stress in the workplace by requesting an advance, speaking to their colleagues about their situation, and asking their coworkers for loans.
When employees are educated on money matters, they’re more focused and loyal. They’re also likely to sleep better and take on fewer side hustles, making it easier for HR to reduce staff vulnerabilities. In the end, reducing your employees’ money stress improves their performance.
Finance Management Has a Familial Ripple Effect
Finance management is an undersought skill set everyone needs. Your employee will be able to coach others about how to manage their own funds, further creating a more financially literate world. Reducing spousal-based money worries keeps your employees’ home life more stable.
What’s more, employees who pass on financial literacy to their children, close friends, or other family members are less likely to deal with money issues during their retirement years.
Getting Started: How to Teach a Finance Class
An employee financial wellness program can teach your staff how to make more informed, effective decisions about their finances. Before setting up your program workbook, ask yourself what your goal is. Do you want a lower turnover rate? Improved productivity?
With that in mind, use these strategies to improve your employees’ financial skills:
- Find their debt-free date. Compare that to their monthly expenses.
- Give your employees a financial self-assessment checklist.
- Explore their triggers. What makes them spend?
- Teach the 50/30/20 rule (50% for fixed expenses, 30% for food, clothing, and entertainment, 20% for debt reduction and savings).
- Create a list of all their debts. Teach the difference between good and bad debt.
- Draw up a budget. Are they able to save with these numbers?
- Talk investment categories and the benefits of compound interest.
- Create a monthly goal. For example, they won’t use credit cards this month.
At the end of the program, test your employees to check if they’ve learned and retained these valuable skills. Be open to criticism. Constructive criticism can help your program improve.
Conclusion
Companies must do more than provide a paycheck to stay competitive. A supportive company culture is the first step to attracting and retaining top talent. Actively assisting your staff in achieving their financial goals will benefit your business in the long run.