Proactive steps to protect the financial wellbeing of tomorrow's worker
Understanding your employee population helps you target and assist varying degrees of financial life-stages, personality types, behavioral influencers and current needs. According to the U.S. Bureau of Labor Statistics, workers between the ages of 16-34 will make up 33% of the labor force by 2030. During this time of life, many workers are engaged in the day-to-day process of earning a living, increasing wage growth and building toward a future. They are saving for both short and long-term goals while also focusing their efforts on accumulating and converting their earnings into assets.
These workers are referred to as accumulators. Accumulators value personal time and want to enhance their quality of life and that drives most of their financial decision making. The challenge of juggling work demands while nurturing family and friend relationships leaves little time for them to focus on their personal finances.
And that can be the fundamental financial literacy gap: the expectation of financial independence before understanding how to apply financial principles to meet their goals. Young workers need access to easy-to-understand and actionable financial information at an early age so they can be a prepared and informed consumers - of not just goods and services, but also financial products.
What are the fundamentals? And where should young professionals start?
- Manage cash flow - Set a budget (assign a dollar to everything), “pay yourself first”, understand a “need” versus a “want”
- Avoid debt as much as possible and learn to manage “good” debt versus “bad” debt
- Concentrate on behaviors - set a framework for good decisions; “know thyself”, and play to your strengths
- Automate finances to avoid missing payments and to consistently save or invest
- Avoid pitfalls - Don’t fall for financial trends or succumb to materialistic instincts
- Seek professional financial advice
- Think about why you have money, why you spend it, and visualize how money can be a constructive tool on your way to achieving your life’s goals
When working with a services provider to offer financial wellness, ensure that employees in this age group receive relevant content to support the Pillars of Financial Planning--“BPI”: Budgeting, Protecting, and Investing. Focusing on these well-established foundational concepts will position this growing employee population for long-term financial health and success.