Financial Literacy Proving Crucial for Wellness

Dean Richard Franza’s column appeared in the Sunday, February 27, edition of the Augusta Chronicle. The post can be viewed here.

As regular readers of this column know, the one social media site I frequent is LinkedIn. While doing one of my regular networking visits to 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 “Younger Workers Are Eager for Financial Wellness Health.” The article cited a financial wellness study of 3,000 adults in the fall of 2021 by insurance company TIAA, in which just 22% of Americans rated their financial wellness as high. However, among our youngest workers, Generation Z (born between 1997 and 2012), only 12% rated their financial wellness as high.

According to the article, there is clearly an appetite for employees to have their employers provide financial training to help improve and maintain their financial wellness, and this appetite is particularly strong among our youngest workers.

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

Our younger workers are clearly seeing the links between financial wellness and job performance and mental/physical health. In this tight job market, they are letting employers know how important it is to them to have access to financial education.

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

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 indicates, in the workplace. What kind of training is needed and who will provide it?

Let’s start with the kind of financial literacy training that is necessary for all ages and move to more advanced topics for people as they age:

Young children through middle school

  • Budgeting, including day-to-day spending: Making spending decisions becomes important at a very early age. Even young children need to learn they must make decisions on how they might spend their money and to allocate it appropriately for what they need and/or want.
  • Saving and investing: Related 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 an early 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, particularly if they choose to finance their college with debt.
  • Credit and credit history: Before they start borrowing money, teens need to understand the value of using credit wisely and creating a strong credit history in order to make future large purchases. In particular, they need to learn responsible credit habits, such as paying bills on time.

 

Beyond high school (colleges, workplaces)

  • Getting a job and managing money: When a young person is hired for his or her first “real job,” the time begins to really understand how to manage one’s money. Going out on one’s own is a new financial challenge consisting of many of the following items.
  • Emergency savings accounts: Advisors recommend we all have savings to tide us over in case of a financial emergency. While many recommend to hold three to six months worth of expenses, that may not be the answer for all.
  • Retirement savings: It is never too early to be thinking about saving for retirement. Given longer life spans and the tax benefits of retirement saving, it makes sense to begin saving right away.
  • Tuition assistance: Additional education often leads to higher income levels and understanding your employer’s potential assistance in paying for that education is crucial.
  • Renting a home vs. buying a home: Understand the pros and cons of home ownership versus home rental.
  • Mortgages: Understand how mortgages work, their tax implications and how that factors into one’s home-buying decision.
  • Large purchases (e.g., vehicles): Gain insight into the overall costs of large purchases, including the cost of borrowing money to make those purchases.

 

There is certainly much to be taught to improve financial wellness. We in the Hull College of Business see this as an area in which we might help. Our accreditor, the Association to Advance Collegiate Schools of Business International – the gold standard of business school accreditation – has made societal impact an integral part of its latest accreditation standards.

Targeting financial literacy and financial wellness is potentially an excellent way to deliver a positive impact on our local community. There are opportunities on our own campus, in schools, in businesses and throughout the community. For instance, Augusta University already has a Literacy Center that will soon reside in the forthcoming Hub for Community Innovation. This might be a potential venue to combine financial literacy with traditional literacy.

Gen-Z has informed us that financial wellness is a priority to them and we know it should be a priority to those of all ages, as it impacts our physical and mental health as well. It is time for us to take a closer look on how we can provide financial wellness for all of those around us.

Written by
Dean Richard Franza

Dr. Richard M. Franza is Dean of the James M. Hull College of Business and Professor of Management. Dr. Franza's primary areas of expertise are Operations Management (OM), Management of Technology (MOT), and Project Management.

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Written by Dean Richard Franza

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The James M. Hull College of Business is accredited by AACSB International and offers outstanding, highly-engaged business education at the undergraduate and graduate levels.