The statistics show that there is currently a majority of employees in North America that would consider themselves living pay check to pay check. The primary effect of this financial situation is that these employees are literally surviving in their "financial present", or in a more general sense, the very short-term. And yet, almost every financial wellness benefit and resource traditionally offered by employers is focused on the longer-term. The obvious, saving and investing for retirement.
This however is a fundamental financial timeline disconnect between employer and employee. It's been shown over and over that employees who spend a lot of energy worrying about covering their monthly bills or their next loan payment are worse off at performing at their job. Employers that are helping these employees be less stressed and more present are really also helping to drive their own business success. There’s no logical business reason why this financial disconnect should even exist.
So why is it that this misalignment between employee and employer hasn't been figured out. Should it not be as simple as employers and employees talking to each other about the issue? One of the hurdles here likely falls on the employee side of the equation. Most are uncomfortable talking about their finances to anyone let alone their boss and when that conversation could involve revealing their financial un-wellness in some sense, they're even less likely to want to initiate that conversation.
A widely accepted idea that is now starting to trend however is that employer’s need to step up and do more for their employees financial wellness, especially in the short term. Recent surveys have shown that over 65% of workers in North America think employers should be more responsible for helping to "initiate" their employees financial literacy. Clearly a shift in thinking is taking hold.
The solution for employers could be to start the conversation with employees focused first on non-financial factors and trying to set a simple "future state mindset" which is really no more than making sure employees understand that where they are today is by no means the end of their financial journey, and that they have lot of room for improvement. A second tactic would be to create an internal financial "social network", someplace where employees can see other employees in the kind of financial situation they want to be in down the road. If employees see others they work with getting help and getting better many more will follow down that same path.
Once these conversations do start to take place the employer can them move on to implementing more structural financial tools for the employee, specifically focused on their short term financial betterment. The ability to suggest payroll savings deductions for example is a feature that almost any employer typically has access to through their payroll system, yet it’s wildly under-utilized.
This would positively nudge an employee to put some of their pay check into a savings account automatically, allowing them to see some specific short term progress. Now, this initial activity isn't going to solve am employees long term financial literacy issues. But it will play a powerful role in helping them build small amounts of actual savings quickly. Thus showing them the first steps of success which can then ultimately lead to a more proactive attitude in seeking and utilizing additional financial wellness tools and benefit programs in the future.