For a number of years now I have been conducting personal-finance education seminars for employees, and it has not been easy. The perceived benefit to corporations of such a seminar is probably how the average person would view life insurance—just an expense. But is employee financial education really just an expense on something that is nice to have? I will answer the question on whether life insurance is just an expense in another article.

Perhaps more today than ever, individuals face challenges from:

            Overspending from the hype in consumerism.

            Back-breaking amortization payments on easy-to-access but high-cost debt.

            Inadequate protection against risks to life and property.

            The arduous task of creating, growing and passing on wealth.

All of these challenges take the mind and body away from work. And while the “in” thing at work is to multi-task, it cannot be denied that such challenges cost time and result in what is probably the greatest pilferage in companies today—the pilferage of time. And these lost man-hours result inn lower employer profits.

How does employee financial stress manifest itself? Here are but a few areas where such a stress rears its ugly head:

            Unscheduled vacation leaves.

            Repeated sick leaves due to simple illnesses (e.g. LBM, fever, ordinary flu, headache, muscle pains, etc.).

            Active availment of health-care benefits.

            Low-quality output, like with increased production rejects or below- standard reports.

            Poor performance by a salesman relative to the average for his team.

            High new-hire training costs arising from high employee turnover.

What do studies and reports show?

            Workers’ financial stress may hurt productivity (Stephanie Armour, USA Today, 9/5/07).

            Poor personal financial planning behaviors breed productivity-inhibiting stress for roughly 15 percent of US workers (Garman, Leech and Grable; Virginia Tech, 1996).

            Job stress leads to increased absenteeism, tardiness and desire to quit (Journal of Occupational and Environmental Medicine).

            One in four of American workers are seriously financially distressed, causing negative impacts to individuals, families and employers (Garman, et al., 3/23/05).

Dr. E. Thomas Garman, who has done over 20 years of research on financial literacy, calculates that the benefit-to-cost ratio to employers of empowering their employees financially through financial education is 3:1. While these studies and calculations are for US workers, Filipino workers should not be far behind.

When asked what would make them financially free, employees would normally say a higher pay. But both Dr. Garman and I believe that more money is not the answer; better personal financial management is. Nearly half a century ago, C. Northcote Parkinson, in his book The Law and the Profits, already wrote, “Individual expenditure not only rises to meet income but tends to surpass it, and probably always will.” This tendency to spend more than what we earn is what employee financial education aims at minimizing, if not eradicating altogether.

Employee financial education is a critical component of employee-wellness programs. When properly executed, employee financial education will help reduce stress both at the workplace and at home. Again, studies have shown that the reduction of employee financial stress leads to higher employee productivity (due to less absenteeism and less work time devoted to personal financial matters), fewer health problems, increased confidence and self-worth of the employee, and inevitably a higher bottom line for the employer.

Teaching money management skills can also enhance:

            Company loyalty—as it sends the message that a company cares about its employees’ well-being.

            Better appreciation of and participation in company benefits.

            Employee retirement readiness—as a financially secure employee will be more likely to accept an offer of early retirement.

I have personally seen the benefits of providing employee financial education. After each seminar, I would ask the participants to write out a contract to themselves with the following guide questions:

            What are the most important or significant ideas that you’ve learned, thought or heard of in this seminar?

            What do you intend to do within the next 30 days as a result of your new ideas?

            By your actions, what results do you hope to achieve?

The participants’ individual contracts are kept confidential while a broad summary is sent to the human-resources department of their employer. To remind the individual participants of their respective contracts, I e-mail or mail their contracts back to them after 30 days.

Truly, the contracts are amazing and inspiring to read. They not only reflect an awakening of the participants to the urgent need to get their personal finances in order,
but also provide concrete action plans to reach the common goal of attaining financial freedom. And the replies I get after I resend the participants’ contracts are equally inspiring. Many would have already indicated progress on the road to financial freedom.

While a financially free employee will redound to better profits for his employer, perhaps the best reward to the employer is articulated in this quote from Dr. Garman, “What could be more important to your employees, morally and socially, than to have them be better off financially when they leave you than when they started with you?”

Cheers.

Efren Ll. Cruz is a registered financial planner with the Registered Financial Planners Institute USA. He is author of the best-selling books Pwede Na! The Complete Pinoy Guide to Personal Finance and a Personal-Finance Coach. He is chairman and CEO of Personal Finance Advisers Philippines Corp. (PFAPC). Questions about the article may be e-mailed to This e-mail address is being protected from spambots. You need JavaScript enabled to view it . Cruz may be reached at the same e-mail address for the scheduling of consultations and personal-finance seminars. This article does not constitute nor form part of any offer or solicitation of an offer to buy or sell any securities. The opinion and views expressed herein are solely those of the author’s and do not necessarily reflect those of the PFAPC. Join the 16th RFP Program (July 25 to September 12, 2009). Visit www.rfp-philippines.com or inquire at This e-mail address is being protected from spambots. You need JavaScript enabled to view it /Tel. No. 634-2204.