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Financial Wellness Education Alone is Not Enough

Karl Holmlund

Think about your physical health. If you want to lose weight or improve your fitness, you can read about it all you want. You can turn on a webinar and watch somebody doing the exercises. You can even go to a gym and listen to the trainer encourage and motivate you. But until you actually get on a treadmill or do those squats for yourself…it’s just knowledge. That alone won’t improve your health.

The same goes for financial health. You can take all the online courses and get all the advice in the world. Then what? Then you have to do the financial “push-ups” to pull yourself up into better financial health.

Better Financial Practices Don’t Have to be Intimidating

The Financial Industry Regulatory Authority (FINRA) has studied the effects of education only on improving “financial capability” with special insight into Millennials. In a 2018 National Financial Capability Study, there is a demonstrable difference among even the financially literate regarding self-perceptions of financial knowledge versus actual financial behavior.

Even among respondents who rated themselves high on a scale of financial literacy following participation in financial education programs, a significant portion (31%) still engaged in costly credit card and banking behaviors. Continuing bad practices like excessive credit card debt, paying only the minimum payments due, and overdrawing checking accounts demonstrated a gap between those receiving financial education and actually adopting better financial practices.

A Financial Wellness partner that delivers a turnkey platform of education, personalized advice, and technology to operationalize financial knowledge into daily practice is one of the most effective ways to truly improve your employees’ financial health.

Overcoming the Millennial Myths About Investing

FINRA also explored common misperceptions about Millennials and investing that sheds some light on how the younger workforce is embracing financial literacy and whether they are putting it into practice.

One fascinating discovery about barriers to Millennials investing is that about half think they don’t have enough savings to make investing worthwhile. And half don’t consider that they have enough income or live paycheck-to-paycheck. Of the same study group, 39% did not have enough confidence in their financial knowledge to embark on an investing regimen on their own.

This could be driven by their perception that investing is complex and they aren’t sure how to start or where to invest. Financial education coupled with an easy to use platform that empowers employees to immediately put their knowledge to work and start investing even small amounts could go a long way toward changing behavior for the long term.

Beyond Education – From Financially Fragile to Financially Capable

The best way to start saving or investing is to just start. On the heels of the education part, your Financial Wellness partner should usher employees right into a fresh financial routine. Get that knowledge from the page to the portfolio.

BrightPlan provides a technology platform that makes automatic saving easy for your employees, whether it’s $10 or $100 a week. They will see visual progress toward well-defined goals that they set themselves. They can choose investment vehicles suited for their personal risk-reward profile. They can adjust a home-buying goal from 5 years out to 2 years, and make changes right away in their monthly financial behavior to realize that goal.

If an employee is considered “financially fragile” and burdened with excessive credit card debt or over-indulging in a daily latte habit, they can see it with spending analysis, and get tips for fixing the problem.

To realize a true shift in the culture of your employees to become “financially capable,” implement an end-to-end financial wellness program that takes education and puts it to work right away.