Benefits of Financial Counseling and Education in the Workplace

Most people inherently know that financial education is a good thing, especially in the current economy. Making good financial decisions, saving, and using credit intelligently are attributes that everyone should strive to possess.

What is not inherently known is that financial education for employees makes good financial sense for employers. In fact, research has shown that there is a three-to-one return on investment for employers who provide financial education to their employees, as twenty-five percent of the workforce has financial problems severe enough to affect productivity at the job, and the cost to an employer for every financially troubled employee ranges from $450 to $2,100. This is due to lost productivity, absenteeism, tardiness, garnishments, accidents, disability and workers compensation claims, increased health care costs, theft, and, when employees cannot contribute to a flexible spending account, higher Social Security costs.

Financial stress also takes its toll on health, contributing to the above problems. A 2009 study by the American Psychological Association found that money was respondents’ top source of stress. In MetLife’s Seventh Annual Study of Employee Benefits Trends they found that employees who assessed their own health as fair or poor also said they were in worse financial shape than their healthier counterparts. And a recent poll conducted by the National Foundation for Credit Counseling found that twenty-four percent of the respondents said that financial stress was causing their health to suffer, while sixteen percent felt their sleep was affected.

In addition, an Associated Press/AOL poll found that, compared with people who had low debt stress, those with higher debt stress had more than three times as many ulcers or digestive tract problems; eleven times as many headaches or migraines; six times as many incidents of depression; twice as many heart attacks; and sixty-five percent more muscle tension or lower back pain.

In addition, those with high debt stress were much more likely to have trouble concentrating and sleeping, factors that can affect productivity at the job. They were also prone to getting upset without reason, which can manifest itself in the workplace.

Employer-sponsored workplace financial education is a strong investment. A good financial wellness program should have two components: group seminars on appropriate financial topics, either through in-person programs or through webinars, and referrals made to a reputable financial counseling agency for those employees who need individual help. Look for a provider that offers both.

Choosing a reliable financial education provider is easy. Meet with the agency, see course catalogs, look at the materials provided in the program, look at outlines of what is taught, and secure references. You can also observe a class or two to ensure you are comfortable with the provider. Consider the research questions offered by the Federal Trade Commission (FTC) piece Fiscal Fitness: Choosing a Credit Counselor.

There is a great deal of research and writing on this subject. A great place to start is with the Personal Finance Employee Education Foundation.

Invest in financial education at the workplace. It is invaluable for employees and a boost to the bottom line for employers.

Kim McGrigg is the former Manager of Community and Media Relations for MMI.

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.
  • The National Council of Higher Education Resources (NCHER) is the nation’s oldest and largest higher education finance trade association. NCHER’s membership includes state, nonprofit, and for-profit higher education service organizations, including lenders, servicers, guaranty agencies, collection agencies, financial literacy providers, and schools, interested and involved in increasing college access and success. It assists its members in shaping policies governing federal and private student loan and state grant programs on behalf of students, parents, borrowers, and families.

  • Since 2007, the Homeownership Preservation Foundation (HPF) has served as a trusted, neutral source of information for more than eight million homeowners. They are partnered with, and endorsed by, numerous major government agencies, including the U.S. Department of Housing and Urban Development and the Department of the Treasury.

  • The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.

  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.