Supporting the Financial Well-Being of Newly Hired Recent Graduates
As summer approaches, a new class of graduates is entering the workforce. They’ve worked hard to earn a degree and secure employment and are likely excited and perhaps a little nervous about their financial future. Thankfully, their employers have a unique opportunity to help ease some of that financial stress and guide them on the right path to better financial security.
Financial Well-Being Benefits Matter Now More Than Ever
Supporting the financial well-being of recent graduates (along with all employees) feels more important than ever before. According to SoFi at Work’s 2022 Workplace Financial Well-being study:
• 75% of employees said they are stressed about their finances
• 60% of employees are already taking drastic measures due to their finances
• Employees are spending on average 9.2 hours a week dealing with finances at work
All of this data tells us that not only are employees more financially stressed, but for many, it’s impacting their productivity and overall mental health. That’s not good for employees or employers.
To make matters more complicated, the class of 2022 is not only dealing with the usual post-college financial stress, like student loan debt and steep housing costs, but they’ve also just faced a global pandemic that has led to higher levels of financial instability and uncertainty for many young adults.
As employers think about ways to attract and retain good workers amidst an unprecedented labor shortage, they may want to pay special attention to the new graduates facing arguably more financial stress than some generations before them.
New Grads Want Financial Well-Being Support
In the aftermath of the pandemic, graduates appear to be looking for financial stability. A 2020-2021 survey by AIG Retirement Services and EVERFI found that two in five graduates planned to start saving for retirement within the first year after graduating and 44% of graduates planned to build an emergency savings fund.
Research also points to a growing interest in financial well-being benefits among the U.S. workforce. In SoFi at Work’s Financial Well-Being study (which included 1,600 HR leaders and employees), 84% of workers said that employers are responsible for their financial well-being. Additionally, 68% said they would sacrifice other benefits – including healthcare, flexible and remote work options, and even paid time off – to keep their financial benefits.
As their financial stress rises, employees’ priorities have shifted, and they’re looking specifically to their employers to recognize those needs and help address them.
How Young Employees View Financial Well-Being
It’s important to recognize that the definition of financial well-being has changed over the years. Financial well-being isn’t just about earning more money and spending less. According to the Consumer Financial Protection Bureau, financial well-being means “having financial security and financial freedom of choice, present and future.” More specifically, having financial well-being is when you:
• Have control over day-to-day and month-to-month finances
• Have the capacity to absorb a financial shock
• Are on track to meet your financial goals
• Have the financial freedom to make the choices that allow you to enjoy life
For employers, this definition means that supporting the financial well-being of newly graduated hires isn’t just about compensating them more. It’s about giving them the tools and resources to help them create a blueprint for financial security and independence. It also means that financial well-being isn’t a one-size-fits-all definition and can mean different things to different employees.
Starting With Financial Habits
Financial well-being often relies on forming better financial habits, which is something that students are rarely taught in school. They might have a college degree in finance or business, but knowledge of how to build credit or establish an emergency savings account, and the specific steps needed to achieve their financial goals, isn’t something newly hired graduates necessarily come equipped with.
That’s where employers can come in. Helping employees form better financial habits can help them lay the groundwork for long-term financial well-being. This often begins with a self-assessment of their current financial wellness and goals. From there, employers can offer financial planning resources, tools, and incentives to drive better financial habits.
While this type of support can benefit any employee, it is particularly valuable to recent graduates at the beginning of their financial journey. Though retirement and family planning might feel years away, the sooner they get started, the more they will be able to save. New hires may also need extra help in certain areas, such as establishing credit, managing student loan repayment, setting up a budget, and getting started with investing.
For employers, the benefit of encouraging better financial habits early in an employee’s work life is two-fold: they can set them up for success and, in turn, generate a healthier, happier, and more productive workforce.
Keeping Employees Engaged With the Right Tools and Programs
Of course, simply offering some financial tools while onboarding your newly hired graduates may not be enough to get (or keep) them engaged. That’s because employees have different levels of financial knowledge. Some may be interested in different types of retirement savings plans, while others are eager to know how to buy a first home. Employees also have different learning styles – some may prefer to read information online at their own pace, while others would benefit most from a one-on-one consultation with a financial advisor, followed by annual reviews.
By offering highly interactive and customizable financial well-being programs, HR leaders can increase utilization among recently graduated hires and keep them engaged over the longer term, since they can grow with the program.
Financial well-being support for newly hired graduates is an important workplace benefit that HR leaders should consider introducing or augmenting. Doing so will help employees build the foundation for financial success and foster a strong and long-term employment relationship.
While designing a well-rounded and robust financial wellness program can sound daunting, employers don’t have to tackle it alone. SoFi at Work has everything HR leaders need to empower their employees’ financial future.
Photo credit: iStock/PeopleImages
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