Workplace financial education linked to stronger financial habits, but participation remains low

Employer-sponsored financial education programs remain relatively uncommon and are disproportionately used by higher-income employees, but new research suggests expanding those programs could have a positive impact on workers with fewer financial resources.

A new report from the Employee Benefit Research Institute and the FINRA Investor Education Foundation found just 9% of workers have participated in workplace-based financial education. Participation climbed with income, with more than one in five workers earning between $200,000 and $300,000 reporting they had taken part in a program, compared with nearly one in 10 workers earning between $75,000 and $100,000.

Despite participation skewing toward wealthier employees, researchers found the programs were associated with stronger financial outcomes across income levels, particularly among lower-income workers. Employees earning less than $100,000 who participated were seven percentage points more likely to report spending less than they earned than similar workers who had not participated. When it came to personal financial conditions, they also reported levels of satisfaction that nearly matched workers earning more than $100,000 who had never taken part in a workplace financial education program.

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The study also found participants demonstrated stronger financial knowledge. Eighty-five percent rated their financial knowledge at five or higher on a seven-point scale, compared with 63% of nonparticipants, while participants scored higher on the survey’s five-question financial literacy assessment. Even after accounting for factors such as income, education and demographics, workers who completed workplace financial education were 42% more likely to achieve a higher financial literacy score.

Financial confidence followed a similar pattern. Nearly nine in 10 participants said they were confident they could achieve a financial goal compared with 73% of workers who had not participated. Researchers also found participants were more likely to report spending less than their income and expressing satisfaction with their current financial condition after controlling for household income, education and other demographic factors.

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The researchers cautioned the findings show a correlation rather than proving workplace financial education directly causes better financial outcomes. Still, the results point to an opportunity for employers to expand access, particularly among lower-income and less-educated workers, who could stand to gain the most.