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Job Outcomes:Personal matters interfering with work
Work time used to handle personal finances
Increased health plan cost
Credit card delinquencies
Credit card debt
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Workplace Financial Literacy
• Millions of employees say they cannot afford to save for retirement; 1 in 4 say credit card debt is a reason
• Employees do not know what they don’t know
• Employers and employees do not understand the value of effective workplace financial programs
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Successful Program Example
• Results from InCharge Education Foundation 18-Month Panel Study (2003-2005) of 7,000 credit counseling clients
• Credit counseling provides one-on-one money and credit management suggestions, a debt management program, and education
“Financial Stress Today”
2005: Data shown for “bottom 4” responses (the negative end,1-4 on a ten point scale) 2003: data shown for “bottom 2” responses (the negative end,1-2 on a five point scale)
“Severe” to
“Overw
helming”
“High” to
“Overw
helming”
Level of Financial Stress
Impact of Credit Counseling (on Health and Family Problems)
55% Agree
48% Agree
44%
46%
48%
50%
52%
54%
56%
2005
2005 48% 55%
Improved health Improved family relationships
Health Family
*Choices were “Yes” or ”No”. This chart is based on question 14 “Since you joined InCharge, has your health improved?” And question 15 “Since you joined InCharge, have your family relationships improved?”
“Feel That Concerns About Personal Finances Interfere With Work”
Based on Question 21 in the 2005 survey. This chart represents the percentage of responses from the bottom half of each scale (2003 and 2005).
2003 2005
Financial Concerns Interfere
“Som
etimes” to “V
ery Often”
Time Lost At Work*(Average Number of Days)
* Note: Time spent not working for any reason
Incidence of Spending Time at Work on Personal Finances
Based on question 22 in 2005, question 25 in 2003. Responses shown are the bottom half of the scales (sometimes to very often), 2003 and 2005.
2003 2005
Respondents R
eporting Time N
ot W
orking
Hours Per Month Spent on Personal Finances at Work
Note: In 2005, Q22 asked panelists to estimate Average Hours per month spent not working due to financial concerns.
2003 2005
Hours P
er Month
Main Personal Financial Activities Done During Work Hours
“PFEEF Advocates Best Practices” Provides employers no-cost-to-use
tools and expertise to detail the bottom-line benefits of quality financial programs
Identifies companies whose workplace programs genuinely improve employees’ personal financial behaviors and increase employer profits
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Use PFW to Assess Employee Personal Financial Well-Being
1. Survey employees using the Personal Financial Well-Being (PFW) scale.
2. PFW is 8-item questionnaire that measures financial distress and financial well-being.
3. PFW is a peer-reviewed valid and reliable measure (over 20 years in development).
4. Use of PFW is free with permission.
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In Closing
• We leave you with the immortal words of the great baseball player, Yogi Berra, of the New York Yankees, who often fractured the English language with his truisms like:
“If you don’t know where you are going, you will end
up somewhere else.”
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Information/FootnotesE. Thomas Garman
President, Personal Finance Employee Education FoundationProfessor Emeritus and Fellow, Virginia Tech University9402 SE 174th Loop, Summerfield, FL 34491 USATele/Fax: 352-347-1345E-mail: [email protected]: www.personalfinancefoundation.org
To examine the PFW scale and read research articles about its use, see http://www.afcpe.org/pages/journal_abstract.cfm?journal_id=290&top_id=21 http://www.afcpe.org/pages/journal_abstract.cfm?journal_id=303&top_id=21
New Book: Delivering Financial Literacy Instruction to Adults, Garman & Gappinger, Heartland Institute for Financial Education (303-597-0197)
For permission to use the PFW scale, contact Dr. GarmanFootnotes:
a Based on reduced absenteeism and less work time dealing with personal financial concerns. See research and press releases at www.PersonalFinanceFoundation.org
b Conservative estimate; research underwayc $1,200 contribution to health reimbursement plan ($1,200 X 0.0765)d $5,000 contribution to dependent care reimbursement plan ($5,000 X
0.0765)e Employee stays in high-cost health plan instead of choosing less expensive
1. Projected 1-year changes in work outcomes:– 12% will improve job performance rating– 16% fewer garnishments– 16% will have reduced absenteeism– 5% less turnover compared to average– 10% will spend less work-time spent on personal
finances– 8% less short-term disability– 9% lower health care costs– 21% will contribute to 125-plans– 5% fewer accidents/workplace violence– 5% fewer thefts– 10% fewer workers’ compensation claims– 14% increase in contributors to 401(k) plan
2. Next assign costs to each factor and estimate increases in work outcomes.
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Summary of Projected 2.8 ROI
for ABC Company*1. Program offered to 28,000 employees2. Program impacts 30% of employees, 8,400, in
varying degrees of effectiveness resulting in improved financial behaviors and job outcomes for some
3. Total value of projected improved job outcomes $4,499,000
4. Projected cost of financial program = $1,600,0005. Projected ROI 2.8/1 ($4,499,000/$1,600,000)
*These calculations are reasonable estimates, not guarantees. Some numbers are very low estimates and ABC Company’s Human Resources Department has the most accurate cost data. Decreases in accidents, workplace violence, and theft, and reduced fiduciary liability are additional ROI values, and they are not part of this ROI calculation, although they should be included.