By Tal Clark
April is Financial Literacy Month – a month dedicated to recognizing the importance of financial literacy and building healthy financial management habits. For employers, this month is a great opportunity to reflect on how they promote financial literacy and wellness within the workplace. When considering which financial literacy resources and tools to offer to employees, it’s important to consider that educational programs may not always be the answer.
While establishing financial literacy is crucial to healthy financial management, the majority of financial wellness courses are designed as a one-size-fits-all solution. In reality, everyone’s financial stressors are different, whether they are living paycheck-to-paycheck, buried by interest payments, or supporting children and older family members, etc. In order to support a workforce that is facing a wide array of personal finance issues, employers should consider implementing benefits that can meet the unique needs of their workforce.
More than anything, employees appreciate solutions that address their immediate needs and create bridges to financial health.
What Financial Literacy “Education” American Workers Really Need
While vital, employees may require financial literacy tools beyond traditional benefits like a 401(k) plan or retirement fund to improve their financial wellness. Examples of these tools include the following:
Emergency Savings Account
The ability to cover emergency expenses is a widespread concern for working Americans, with 63% not having even $500 saved for emergencies. This percentage is lower among individuals with higher financial literacy, as households that are more knowledgeable and confident in their finances are significantly more likely to report having emergency funds.
To address this issue, some employers offer employer-sponsored emergency savings accounts. Through this benefit, employees have the option to dedicate a small portion of their paycheck to be deposited into this account. In some cases, employers offer the additional benefit of matching the amount added to the savings account.
Financial Therapy
54% of working Americans worry multiple times a week or more about having enough money to make ends meet between paychecks. Given that more than half of working Americans are experiencing financial stress, it is important to note that financial stress and insecurity can have a significant impact on mental wellness. For example, 52% of Americans say money negatively impacts their mental health, citing inflation, interest rates, job insecurity, and not having a stable income as causes.
One way employers can combat financial-related stress is to offer access to financial therapy, a form of therapy to help manage financial stress through a combination of financial advice and emotional support. Through this, employers can help build an internal support system for employees who may be concerned about their finances.
Innovative Technologies
In order to promote financial literacy, many employers may consider providing access to financial tools within their benefits program, like budgeting templates, expense tracking, or services that analyze and provide recommendations surrounding spending habits. If considering this option, employers should note that 77% of Americans find it easier to manage their finances through mobile apps.
Therefore, employees are more likely to use mobile programs that help them save money, manage their finances, and build credit rather than traditional tools and education programs. Honeydue, for example, is a personal finance app for couples that allows them to create a monthly budget by linking credit cards, loans, investments, and bank accounts. Tools like this allow for financial education through doing, not just telling.
It’s My Money and I Need It Now
Employers should also consider how payroll technology fits into their financial literacy and wellness programs, in order to break through the limitations of traditional payroll cycles. In the early 2000s, J.G. Wentworth released a commercial that had everyone yelling, “It’s my money, and I need it now!” This phrase is still relevant for working Americans today, especially as traditional payroll cycles prevent them from receiving their earned wages whenever needed.
Earned wage access is a financial wellness benefit that provides employees with the opportunity to receive their earned wages after a day’s work anytime they need it. This benefit has hit the market as an alternative to traditional payroll cycles, providing flexibility around when they receive their funds, and helping employees bridge the gap between paydays.
By providing employees with the ability to access their pay in between pay periods, their ability to quickly and easily account for any unexpected costs or pitfalls increases. For example, more than 50% of working Americans would be more likely to avoid major financial pitfalls if they were able to access their earned wages after every day’s work.
While it’s not a one-size-fits-all financial education program, EWA gives employees the power to make informed choices about their hard-earned money and provides them with greater flexibility around how they receive that money.
This flexibility is necessary for promoting financial stability and wellness within the workforce. At Instant, we offer pay optionality within our portfolio of solutions.
Pay optionality is a multifaceted approach to financial benefits that offers employees flexibility and control over how they receive their earnings. We offer this through multiple main payment options, including earned wage access, electronic tips, and comprehensive payroll solution:
- Earned Wage Access: a solution that provides employees with access to a portion of their pay right after they finish a shift, without the burden of predatory fees
- Payroll: an electronic pay solution that allows employers to pay their employees on a predetermined pay cycle, delivered fee-free to their Instant account, without the need for a traditional bank account.
- Electronic Tips: an electronic tips solution that provides tipped employees with instant access to their tips after every shift, free of fees.
As financial literacy becomes increasingly essential in navigating today’s economic landscape, embracing innovative tools and technologies is key to empowering individuals and organizations alike toward greater financial well-being.
If you’re interested in learning more about the benefits of earned wage access, download our whitepaper on the impact of financial strain or reach out to an Instant Financial representative to discuss how EWA can benefit your employees.
