Employees continued to keep a hands-on approach to their finances in the second quarter of 2013, according to the latest research from Financial Finesse. Furthermore, college planning took over as a top priority.
Nearly a quarter of employees said college planning was a top priority, up from 16% in the second quarter of 2012. Twenty-seven percent of employees with minor children said they were contributing to a 529 plan, also up from 16% a year ago.
Confidence in the economy and their investment strategy is also up; however, Liz Davidson, CEO and founder of Financial Finesse, said overall levels of wellness are not improving overall. Employees' overall financial wellness has remained at 5.2 since the first quarter of 2013 and has bounced between 5 and 5.3 for the past year. It reached its highest level, 5.4, in the last quarter of 2011.
"Despite the strides forward that employees made in Q2, employee financial wellness is still not where it needs to be based on the economic challenges that we are likely to face in the next decade and beyond," Davidson (right) said in a statement. "There are major gaps in key areas that if left unaddressed will have major economic implications."
Some of those gaps include retirement planning, cash and debt management and, despite improvements, college planning. Davidson noted that the percentage of employees who are on track to retire is still disturbingly low — 20% — and employees' cash and debt management wellness scores continued to in the second quarter. Employees' cash flow score fell from 7.3 in the third quarter of 2012 to 6.7. Their debt management score followed a similar trajectory, dropping form 6.2 in the third quarter to 5.7 today.
And while college planning risen as a priority over time, Davidson noted that it's not enough.
"Even though we're glad to see an increased focus here, nearly three-quarters of employees with minor children are not currently contributing to a 529 plan or similar type of savings vehicle," she said. "On top of that, many employees don't understand the basics of scholarships and financial aid, and in some cases they are tapping their retirement savings to put their children through college."
