Key Questions

Key Questions Topics:

1. What Should a Quality Financial Literacy Program Accomplish?
2. Why Don't Employees Save, or Save Enough, for Retirement?
3. How Can Employee Benefits Help?
4. What Can People Do to Get Ahead Financially?
5. What are Good Financial Behaviors?
6. How Can Employers Help Employees Improve Their Personal Financial Behaviors?
7. Target Financial Program on Level of Employee Financial Distress
8. What communications strategies should be used to motivate employees to develop positive financial behaviors?
9. Should Workplace Financial Program Providers Teach to the "Test of Financial Health"? Yes!
10. What is PFEEF all about?
11. PFEEF's Accomplishments: 2006-2009

1. What Should a Quality Financial Literacy Program Accomplish?
A quality financial literacy program should help people practice good financial behaviors that over time result in positive changes in their financial lives. The changes include increases in assets, decreases in liabilities, increases in net worth, decreases in financial distress, increases in financial wellbeing, being on track for a financially successful retirement, and being prepared to legally transfer assets to beneficiaries.

A quality workplace financial program should provide employees access to help with their overall financial fitness at every stage of their careers. This helps employees live better financial lives as well as maximize savings for retirement.

2. Why Don't Employees Save, or Save Enough, for Retirement?
The lack of financial literacy-spending plans, credit management, and savings-is the major reason why employees do not save for retirement. Research shows that 30 million American workers-1 in 4-report they are seriously distressed and dissatisfied with their financial matters. Financially unwell employees do not make the best decisions for themselves.

3. How Can Employee Benefits Help?
The employer's benefits package is at the very core of financial success for an employed person. Those who make wise choices among benefit options save money, reduce income taxes, and increase retirement savings while securing benefits that genuinely fit their needs. Such decisions lead to better personal money management behaviors that maximize the likelihood of financial success throughout their lives.

4. What Can People Do to Get Ahead Financially?
People can get ahead financially only by sacrificing some current spending to save and invest and by practicing good financial behaviors. On your side working for you, instead of against you, will be compound interest earnings on savings accounts and retirement funds (instead of rising credit card balances) and the favorable effects of inflation on rising stock market prices and growing home equity (instead of price rises on a home not yet purchased).

5. What are Good Financial Behaviors?
There are many good personal financial behaviors that are important in achieving financial success. A fundamental truth is that one must spend less than one earns, thus sacrificing some income to invest for a future lifestyle. Some additional (but not all) good financial behaviors are: Establish financial goals and realistic plans to achieve them; join a credit union; save regularly; maintain an emergency saving fund; take advantage of opportunities to tax-shelter some income through one's employer; use a budget to control spending; budget for irregular expenses; save for a down payment on a home using a Roth IRA account; buy a home to take advantage of income tax deductions and eventual rises in one's home equity; pay credit card charges in full every month; pay bills off fast; maintain an excellent credit reputation; calculate personal debt limits and adhere to them; evaluate and compare services, comparison shop for expensive purchases, installment credit, mortgage loans, insurance, and investments; carefully make risk-management assessments of what types and amounts of insurance are appropriate; save as much as possible every year for retirement by investing in mutual funds through tax-sheltered retirement accounts; always save within an employer-sponsored retirement plan at least the amount required to obtain the largest matching contribution; leave your retirement money where it belongs during your working life-in your retirement accounts; prepare and update as needed a will, advance directive documents and beneficiary and ownership designations.

6. How Can Employers Help Employees Improve Their Personal Financial Behaviors?
Many employees need to realize that they have some financial behaviors that need changing. To succeed they must believe that they can successfully change those behaviors, and they must have a plan to change. Employers can help by giving employees easy access to quality financial programs.

7. Target Financial Program on Level of Employee Financial Distress

Suggested topics for a quality financial program follow. The topics targeted to groups of employees should differ based on employees’ reported levels of financial distress. The financial program provider working with the employer also can help make appropriate decisions about which financial program information should be emphasized with which groups of employees. Their scores on the Personal Financial Wellness (PFW) scale are on a continuum ranging from 1 (overwhelming financial distress/lowest financial well-being) to 10 (no financial distress/highest financial well-being. )

High financial distress/Poor financial wellness (PFW scores = 1, 2, 3, and 4)

• Setting financial goals
• Individual budgeting, credit education, and credit recovery counseling
• Benefits information
• Credit union and bank affiliations providing preferred services to employees
• Coaching in how to begin preparing for a financially successful retirement

Average financial wellness/average financial distress (PFW 5 and 6)

• Benefits information
• Credit union and bank affiliations providing preferred services to employees
• Money coaching on critical wealth management practices
• Tax preparation education
• Mortgage lender education for achievement of homeownership goals
• Insurance education
• Investment education and advice
• Retirement planning education that explains the various components of post-work income and how to continue preparing for a financially successful retirement
• Estate transfer workshops
• Post-retirement financial education

High financial wellness/low financial distress (PFW 7, 8, 9, and 10)

• Retirement planning education that explains the various components of post-work income and how to continue preparing for a financially successful retirement
• Money coaching providing direct education on critical wealth management practices
• Investment advice
• Tax preparation education
• Estate transfer workshops and individual counseling
• Post-retirement financial education

8. What communications strategies should be used to motivate employees to develop positive financial behaviors?
PFEEF is researching how to motivate employees who are not yet ready to take that first step toward a better financial life. The strategies being tested are based on the successful Stages of Behavior Change Model developed and tested by Prochaska and colleagues for more than 30 years. The model can target employees for financial education based on their readiness for change. Click here for more information (PDF).

9. Should You Teach to the “Test of Financial Health”? Yes!
Click here for more information (PDF).

10. What is PFEEF All About?
Click here for more information (PDF).

11. PFEEF's Accomplishments: 2006-2009
Click here for more information (PDF).