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Help your millennial employees master their money

When it comes to their finances, the struggle is real.

There are plenty of stereotypes and myths about millennials as employees. While most have been debunked, there is one that persists: Many of them are struggling with their finances.

Did you know Wellmark Blue Cross and Blue Shield have partnered with SmartDollar®? Watch their latest (and free) webinar, "Bringing Financial Wellness to Your Employees," External Site to learn about the impact a real financial well-being solution can have on your employees, and the free resources available to you (client or not) during COVID-19.

First of all, it's important to understand that two-thirds of millennials are living paycheck to paycheck External Site However, the story of the cash-strapped millennial isn't so simple. Consider this research about millennials and their assets from the National Endowment for Financial Education (NEFE) External Site.

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41 percent own their home

38 percent have a college degree

51 percent contribute to a retirement account

This seems promising, right? So, what’s the problem?

According to the NEFE report, millennials are lacking in financial literacy, or the financial and economic concepts that strengthen decision-making. Only 24 percent External Site of millennials have even a basic level of financial literacy.

But, here’s the rub: 69 percent of millennials are very confident in their financial knowledge, rating it “high.” In reality, however, only 8 percent of millennials actually demonstrate a high level of knowledge in this area. In other words, millennials are overconfident in their own financial skills. This leads them to rely on their own knowledge rather than seek professional advice.

They’re skeptical, for good reason

With millennials being unprepared to make complex financial decisions, you’d think banks and investment advisors would be in hot pursuit. But, most financial advisors are unwilling to take on clients who don't already have a small fortune in the bank. And, millennials have some valid trust issues when it comes to seeking this type of advice. In fact, most prefer to learn about money from a family or friend External Site.

That’s because older millennials graduated from college when jobs were scarce. Some came of age during the 2008 financial crisis. Others saw their parents’ banks foreclose on their homes. When they finally reached the starting gate, millennials were tripped up by student loans. All of this has led to a general mistrust of financial institutions External Site.

Millennials also tend to not trust investment advisors. In one survey External Site, 67 percent of millennials reported that financial advisors recommend products and solutions that are in their own best interest. (Only 22 percent of boomers and 15 percent seniors felt the same way.)

Stagnant income + cost of living increases = debt

Then, there’s the common misconception that millennials are spending their money frivolously, most notably on avocado toast and $4 lattesExternal Site. However, according to research from economists at the Federal Reserve External Site, their spending habits aren’t so different from previous generations. The real problem is their incomes have remained stagnant External Site, while significant economic expenses — like buying a home and paying for college — have increased at a much faster rate.

So, while the economy is booming, adults age 18 to 29 (younger millennials and older Gen Z-er's) are feeling the squeeze External Site. Their wages are unable to keep up with the rising cost of living and historically high housing costs, which adds to the pressure. This makes it difficult to save and easy to fall into debt:

Debt, or the fear of debt, is the primary reason 22 percent of millennials continue to live in their parents’ home External Site. This makes them the first generation to fall behind their parents’ standards of living. Therefore, they are slower to reach certain markers of adulthood, such as starting a family, owning their own home or becoming financially independent.

3 ways you can help

In her work with millennial employees, Ashley Maher-Widen, a consultant who works as an on-site financial wellness and retirement counselor at Wellmark, says millennials show up to her seminars, are open to guidance, and are generally in tune with what's going on with their pocketbooks.

By the time they come to me, they are ready to take action. And as you might expect, student loan debt is their major concern,” she says. “They also want help with their investments. Overall, they are open to solid advice and prepared to tackle any debt.

Here, she outlines three ways employers can help their millennial employees make smart money moves:

  1. Appeal to emotions and build the relationship.

  2. By appealing to emotions, Dave Ramsey has become the financial guru of choice for millions of followers. Interestingly enough, his no-nonsense approach is particularly appealing to broke millennials. Rather than trying to sell them on a particular investment strategy, he gives them a clear path (SmartDollar's article on 7 Baby Steps External Site) to get out of debt, and to top it all off, the battle-cry of the Debt-Free Scream External Site.

    Maher-Widen agrees that appealing to emotions and building relationships are key in helping people with their finances. “Ramsey is reaching the masses,” she says. “And with on-site financial counseling, I can establish personal relationships with my clients.”

    "It’s Ramsey who said personal finance is 80 percent behavioral, 20 percent head knowledge External Site. Appealing to the emotional side of finances works for many people." she says.

    Read the personal story Opens in a new window of Wellmark members (and millennials), who succeed in becoming debt-free by following the 7 Baby Steps External Site SmartDollar is based on.

  3. Go mobile.

  4. "Mobile technology is a game changer when it comes to younger generations," says Maher-Widen. The vast majority of millennials own smartphones and, for a quarter of them, mobile banking has become an “essential part” of managing their finances External Site. About 40 percent believe their mobile devices help them maintain better control over their finances.

    “There is such a wide range of ages for millennials, but overall, they’re mobile-oriented,” adds Maher-Widen. “They’re comfortable with technology, and they’re looking for digital banking services, portfolio management and debt services.”

  5. Focus on financial wellness.

  6. The workplace suffers when employers don’t address the financial well-being of their employees. (And, if you don’t think your employees are worried about their finances, think again.) When employees are struggling financially, their overall health and well-being is at risk. “You can definitely see a correlation between physical, mental and financial health,” says Maher-Widen.

What's more, employees are turning to their employers for help with their finances. In fact, about 40 percent of employees External Site say they would like their employer to provide additional help with financial wellness. Millennials also value non-health related benefits like student loan repayment assistance or tuition reimbursement. Other ways you can help employees with their finances is by offering an on-site financial counselor, workshops or education, and online tools like budget calculators at no additional cost External Site.

How can you prepare your work site for the future? Based on the findings from the Blue Cross® and Blue Shield® Health of America Report®. Wellmark hosted conversations across Iowa and South Dakota to understand ways to create sustainable, lasting change. Here, we've compiled six key findings every employer needs to see.

Help your employees get to the root of financial insecurity with SmartDollar®

Most financial programs only focus on treating the symptoms of inadequate financial health. But with SmartDollar® External Site, your employees will receive a holistic, step-by-step plan External Site proven to get to the root of financial insecurity.

Over the last 25 years, SmartDollar has helped millions of people change the way they handle money. Through video lessons and real-world content applications, a team of experts, including Chris Hogan, Rachel Cruze and Dave Ramsey, inspires employees to take action and make the most out of their money.

SmartDollar can help each employee within your business. From the C-suite to non-traditional employees, everyone can receive the education and support they need to prepare for their financial future.

Get more insights on workplace millennials

Millennials are not all the same. In fact, they want a lot of the same things as previous generations. But, because millennials are the most culturally and ethnically diverse age group in the workforce, taking the same old approach could cost you. For more tools, resources and insights on how to manage millennials, visit our exclusive content page.

Want more information about adding SmartDollar to your suite of well-being programs? Visit the Wellmark Marketing Toolkit Secure Site to download the financial well-being overview flyer.

Questions? Contact your authorized Wellmark account representative, or email us at Send Email.