Millennials are the largest demographic in U.S. history, but the least knowledgeable when it comes to their finances. Historically younger generations learned from their elders. The demands of remaining competitive – both professionally and academically – leaves little time for either parents or children to indulge in lessons about better money management. Yet the enticements to waste both time and money have never been more compelling in human history.
Employee Literacy Programs
In response, employers are expanding programs to build financial literacy among their employees. In 2019, The Employee Benefit Research Institute surveyed companies with over 500 employees, where respondents expressed interest in financial wellness programs. The “Employer Approaches to Financial Wellbeing Solutions Survey” asked employees the meaning of financial wellness. The survey also asked what kind of financial problems they are trying to solve, and what type of solutions their employers are providing. Collectively these programs are designed to help retain employees. Although employers do not strictly aim these programs at millennials, that generation stands the most to gain by actively participating in these programs when they can.
What These Programs Offer
At the heart of many financial literacy programs is education about developing good budget and savings habits. Employees learn how to plan expenses, cut spending, and set savings goals to control their spending. This education is important because research indicates that employees fall into four broad categories when it comes to spending:
- Budgeters naturally follow a strict budget and don’t generally overspend.
- Actives monitor their financial situation in their heads but don’t budget and generally don’t overspend.
- Reactives don’t often think about their financial situation but spend in response to their feelings and situation and overspend occasionally.
- Spenders don’t proactively monitor their financial situation and often overspend.
Research indicates that less than one-third of employees are natural budgeters.
Some of these programs also offer:
- Managing cash flow
- Calculating debt-to-income ratio
- Qualifying for mortgages
- Managing credit and credit ratings
- Securing digital financial assets
- Evaluating and mitigating risk
- Soliciting and following financial advice
The Benefits to Society
Observers perceive financial wellness initiatives as a benefit to both employers and employees. The Employee Benefit Research Institute found that 46% of the employer respondents provided holistic financial wellness programs as a means to motivate and drive worker satisfaction. 35% of that number offered employee financial education programs to improve retention rates. Not only do employees stay with employers longer, but they are also more satisfied with the job. To millennials, a workforce defined by job-hopping, workplace satisfaction is an expectation, not a privilege. Moreover, according to Charles Schwab’s “2019 Modern Wealth Report”, less than half of millennials feel financially stable. These types of programs might entice millennials to stay with their current company.
What You Can Do
As a parent of a millennial, you can encourage your children to participate in such programs. It might even be wise to offer a matching gift for any contributions they make to their company 401K or other employer retirement scheme. Consult with your financial and tax adviser as to the best way to make these gifts.
As an employer, you can offer employee literacy programs to your staff. The Employee Benefit Research Institute is one place to start. The Institute is a private, nonpartisan, nonprofit research institute based in Washington, DC, that focuses on health, savings, retirement, and financial security issues. It might even be wise to offer a matching gift as an incentive for contributions to savings, be it to an IRA, Roth IRA, or an after-tax savings vehicle.
As a millennial, you can investigate and actively participate in whatever financial literacy programs your employer offers.
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