Financial literacy is key to supporting overall well-being

As regular readers of this column know, the only social media site I frequent is LinkedIn. During one of my regular networking visits on LinkedIn, I saw an article from the Society of Human Resource Management that was generating a significant amount of comments.

The article, written by Stephen Miller, is titled “Young Workers Eager for Financial Well-Being.” The article cited a study of the financial well-being of 3,000 adults in the fall of 2021 by the insurance company TIAA, in which only 22% of Americans rated their financial well-being as high. However, among our youngest workers, Generation Z (born between 1997 and 2012), only 12% rated their financial well-being as high.

According to the article, employees clearly want their employers to provide financial education to help them improve and maintain their financial well-being, and this appetite is particularly strong among our younger workers.

Unfortunately, financial wellness is often overlooked by employers and healthcare professionals. According to a study by Schwab Retirement Plan Services, nearly half of Gen Z workers said financial stress affects their ability to work. Financial stress has often been linked to higher rates of mental health problems such as depression and anxiety and physical health problems such as migraines, heart disease and sleep problems.

Our young workers clearly see the connections between financial well-being, job performance and mental/physical health. In this tight job market, they are letting employers know how important it is for them to have access to financial education.

I have been a supporter of financial education for a long time. In this space two years ago, just before COVID shut things down, I wrote a column advocating that financial literacy be taught as part of the “general education” curriculum throughout the Georgia university system, or at least here at Augusta University. My feeling then was that if we could teach our current students to be financially literate, they would enter the workforce “healthier” in at least one sense.

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However, since then I have come to believe that while financial literacy in college would be a big plus, there is a place for such training in K-12 education and, as Gen-Z points out, At work. What kind of training is needed and who will provide it?

Let’s start with the type of financial literacy training that is needed for all ages and move on to more advanced topics for people as they get older:

Young children up to middle school

  • Budgeting, including daily expenses: Making spending decisions becomes important at a very young age. Even young children need to learn that they have to make decisions about how they might spend their money and allocate it appropriately to what they need and/or want.
  • Saving and investing: When it comes to budgeting and spending, people of all ages need to know how to save their money for emergencies and long-term needs and wants. Learning about investments at a young age can teach children that in addition to working for your money, your money can work for you.

High school

  • Saving for college and understanding college debt: As students enter high school, they need to understand how the cost of college will affect them, especially if they choose to fund their college with debt.
  • Credit and credit history: Before they start borrowing money, teens need to understand the value of using credit wisely and building a strong credit history in order to make future major purchases. In particular, they should learn responsible credit habits, such as paying bills on time.

Beyond high school (colleges, workplaces)

  • Find a job and manage your money: When a young person is hired for their first “real job”, time begins to fully understand how to manage their money. Dating alone is a new financial challenge made up of several of the following components.
  • Emergency savings accounts: Advisors recommend that we all have savings to tide us over in times of financial emergency. While many recommend sticking with three to six months of spending, this may not be the solution for everyone.
  • Pension saving: It’s never too early to think about saving for retirement. With longer lifespans and the tax benefits of saving for retirement, it makes sense to start saving right away.
  • Tuition Assistance: Additional training often leads to higher levels of income and it is crucial to understand the potential help from your employer to pay for this training.
  • Renting a house or buying a house: Understand the pros and cons of home ownership versus renting a home.
  • Mortgages: Understand how mortgages work, their tax implications and how it affects the home buying decision.
  • Major purchases (for example, vehicles): Get an overview of the overall costs of major purchases, including the cost of borrowing money to make those purchases.

There is certainly a lot to learn to improve financial well-being. We at Hull College of Business see this as an area where we could help. Our accrediting body, the Association to Advance Collegiate Schools of Business International – the benchmark for business school accreditation – has made societal impact an integral part of its latest accreditation standards.

Targeting financial literacy and financial wellness is potentially a great way to positively impact our local community. There are opportunities on our own campus, in schools, in businesses and throughout the community. For example, the University of Augusta already has a literacy center which will soon be installed in the future Hub for Community Innovation. This could be a potential place to combine financial literacy with traditional literacy.

Gen-Z informed us that financial well-being is a priority for them and we know it should be a priority for people of all ages as it also impacts our physical and mental health. It’s time for us to take a closer look at how we can ensure the financial well-being of everyone around us.

The author is Dean of the Hull College of Business at Augusta University.

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