Report: Employee Financial Literacy Decline Sparked by Stress of Personal Financial Instability

A newly release report of a study conducted by workplace financial education provider Financial Finesse found that the financial literacy and wellness of employees deteriorated in the third quarter of this year on the heels of higher levels of stress and concern among such individuals relating to the weaker economy and to their own financial insecurity.  While the study illustrated that financial education and capability in daily money management improved, that gain was outweighed by inadequate financial literacy and other important areas.

Financial literacy observers and practitioners were most interested in the report’s finding that employees exhibited a higher than usual level of awareness of their vulnerability in the area of personal finance, which seems to be fueling a feeling of stress and insecurity about their abilities to be successful in managing their individual and family financial affairs.  Along those line, more than forty percent of employees reported that they are uncertain as to whether they will achieve their future financial objectives. That compares to thirty-four percent of respondents in Q3 2012 and thirty-three percent of respondents in Q3 2011.

One cohort exhibiting more attentiveness to their personal financial wellness than in the past is the forty-five years and older category of employees, which included forty-eight percent of all respondents in this year’s assessment, as compared to only forty-four percent who participated during the same third quarter period in 2012.  This finding is consistent with the trend among older individuals who increasingly are concerned about issues such as security in retirement, rising health care costs, and the challenges associated with providing financial support for both their younger children and older parents. And the concerns are warranted; less than fifteen percent of employees over the age of forty-four have in pace an insurance policy for long-term care, as compared to eighteen percent of respondents in the same age group as of the third quarter of 2012.

The results of the Financial Finesse study also shed light on the real-world impact of the weaker economy and the high levels of financial illiteracy that exist regionally and globally.  At the same time, however, employees are participating in financial education programs at higher rates than in the past, and more effective financial literacy initiatives programs are being rolled out each year to arm employees with better information, tools and resources to make better informed decisions regarding their personal financial affairs.

Financial education in the workplace remains one of the more common formats for the delivery of financial literacy services, but other formats are also quickly gaining momentum.  During the last twelve months, online programs, in-personal seminars, one-on-one counseling initiatives, and digital game solutions have all skyrocketed in terms of their use by individuals and families to learn basic financial concepts, as well as ways to better manage their finances.  As this trend is expected to endure, levels of financial literacy and wellness should continue to rise as well, resulting in a brighter outlook for financial capability in the years ahead.