Financial Lit: They Didn't Teach Us This in School
by Caroline Boyland June 29, 2022
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History, Math, Phys-Ed…Financial Literacy?
You know those “why didn’t we learn this in school” jokes? They go something like:
“Things I learned in school: the pythagorean theorem. Things I didn’t learn in school: How to balance a checkbook.” Or “Why do I know that the mitochondria is the powerhouse of the cell but no one thought to teach me how to file my taxes?”
As fun as it is to riff these jokes back and forth (and as important as the pythagorean theorem and knowing cell composition is in some career fields), it’s an unsettling reality that many of us feel like we missed out on learning a core subject that impacts our lives daily — financial literacy.
Breaking down the numbers
To get specific, Gen Z refers to those born between 1997 and 2012. With the oldest Gen Z-ers turning 25 this year, the demographic hasn’t even begun to fully infiltrate the workplace—but statistics show that by 2023, there could be as many as 51 million Gen Z employees in the workforce.
SHRM recently ran a study on financial wellness, and the numbers were, quite frankly, unnerving. They found that only 22% of Americans rate their financial wellness as high, and of those surveyed, Gen Z had the lowest confidence - with only 12% rating their financial wellness high.
When it comes to employee benefits, our recent research found that 0% of Gen Z is confident when selecting benefits, 20% responded that they were “moderately confident,” and 80% responded that they were “unconfident.” Selecting benefits is the most important health and financial decision we make each year, and Gen Z is being left completely in the dark when it comes to decision making. Select each demographic in the chart below to explore enrollment confidence by age group.
This financial stress not only impacts the emotional wellbeing of employees, but can also impact motivation and productivity at work.
These concerns span generations, but with Gen Z entering the workforce, all eyes are on them—and the research is showing that the newest members of the workforce have the lowest confidence in their financial well-being.
Financial wellness and the workplace
We’re all humans here, it’s no secret that stressful situations in our personal lives can impact our productivity at work. Despite efforts to keep work and life separate, mental stressors can unfortunately reach us anytime, anywhere—and unlike physical workplace distractions, we can’t block these ones out with our noise canceling headphones.
73% of Americans rank finances as their number one stress, as reported by CNBC, and 44% of surveyed Gen Z employees reported that financial stress affected their ability to work in 2021.
Employees, and more specifically Gen Z workers, are looking to employers for answers. In a world where resignations and job shuffling are oh-so-common, how can employers take this into consideration when thinking about new ways to attract and retain Gen Z talent?
To alleviate some of this stress, employers can begin to offer more by way of financial support. In this case, we’re not talking about bonuses and raises (of course, those can’t hurt either), but about working to solve the problem that the stress is stemming from — poor financial literacy.
To attract and retain talent, employers can offer programs, such as virtual training and seminars or other non-traditional benefits, that teach employees the basics of financial literacy. And it’s critical to keep in mind that financial stressors look different for each unique employee. Employers need to provide education around finances that speaks to the individual concerns across the business: from the person who is newest to the workforce, to the individual closest to retirement, and every employee in between.
Since Gen Z has the lowest confidence in their financial wellbeing, how can employers support these newer employees and strengthen their financial literacy? Let’s put ourselves in their shoes. Think about a recent college grad entering the workforce. This is probably their first major source of income, and it can be difficult to understand how much should be saved, how much to spend on life expenses, and what to do with the rest. Research shows that the average college grad comes out of school with around $40,904 in private and federal student loan debt. Should Gen Z be putting more money towards their student loans, or thinking about retirement and placing their focus in their 401K? Where should their focus be? These are the types of questions employers can provide education and support around.
In that same line of thought, organizations can consider offering new types of benefits that give employees more confidence over their finances, like savings programs, student loan repayment assistance, and others.
To strengthen financial literacy across the organization, employers must ensure that they’re providing unique support for all employees. HR experts agree that companies must step up to help workers. SHRM reports that younger workers are eager for assistance from their employers. "Employer- sponsored financial wellness support is both needed and wanted by employees, especially for workers who might need help the most," said Snezana Zlatar, the Senior Managing Director and Head of Financial Wellness Advice and Innovation at TIAA, an investment services firm. She added that "people who have taken part in an employer financial wellness program can see a considerable difference, indicating that it truly makes sense for employers to redouble their activities on this front."
Benefits decision support
When it comes to the lack of confidence around decision-making, employers can consider enriching their benefits strategy with a decision support tool. A decision support tool like Nayya can provide comprehensive, personalized benefits education and plan recommendations to employees based on their unique health and financial needs.
Nayya uses a short questionnaire to compare an employee’s personal profile, with their health and financial needs and the plans offered by their business. From there, Nayya suggests to the employee exactly which plans to choose and why, using tools like real-life scenario planning to demonstrate the value of the suggested plans.
Nayya enables employers to provide the unique benefits education to each employee, from Gen Z to Baby Boomers, to ensure that employees are making decisions that lead to optimal health and financial outcomes.
The bottom line
As an employer, educating around financial literacy will lead to widespread financial wellbeing throughout your organization. This will help your employees better manage their day-to-day finances, feel more confident, less stressed, and more productive in the workplace. Each generation has different financial concerns and stressors. With Gen Z stepping into the workforce, it’s critical that employers take a personalized approach to education for all employees, because when it comes to finances they quite literally did not teach any of us this in school.
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