Getting paid is just the start. To make smart financial choices, employees need to understand their pay.
Yet, many professionals lack this clarity. According to The State of Financial Well-being report by BrightPlan, only 18% of employees have basic financial literacy. That confusion fuels financial stress.
However, financial wellness goes beyond knowledge; it’s about applying that knowledge to build stability and reduce stress. A PwC survey found that 71% of U.S. workers report feeling moderately to highly stressed about their finances, with 65% living paycheck to paycheck.
This stress follows employees into work, impacting their productivity and engagement. Some of the consequences include:
- Lower energy and engagement
- A weaker sense of belonging
- Less alignment with company values
- Reduced pride in their employer
- Increased likelihood of seeking new opportunities
In a recent episode of Paycom’s HR Break Room® podcast, Jean Chatzky, bestselling author and former NBC Today Show financial editor, spoke about the keys to achieving financial wellness.
Specifically, she discussed the concept of Pay Literacy, which is the ability to understand every component of your paycheck, including:
- How earnings are calculated
- What deductions are taken
- How benefits impact take-home pay
- What each line item represents
- How compensation is structured
Jean emphasized how Pay Literacy is crucial for reducing financial stress and empowering employees to take control of their finances. It’s not just about understanding the numbers; it’s about applying that understanding to feel more secure and confident in managing your money.
The Growing Demand for Financial Literacy
Providing financial-related resources and education is crucial for preventing burnout, turnover and avoiding toxic work culture. However, a 2024 Pollfish survey commissioned by Paycom found only 38% of professionals say their employer offers financial wellness programs. A separate March 2023 survey revealed that just 28% feel confident in their understanding of payroll tax deductions.
A December 2023 Pollfish survey found that more than 1 in 3 employees experienced a payroll mistake in 2023.
These errors don’t just frustrate staff; they’re costly for businesses too. A 2023 IRS study found that 33% of employers make payroll mistakes, and it assessed billions in collections and penalties.
The Solution: Pay Literacy and Self-Service Payroll
Paycom’s intuitive payroll tools foster greater pay literacy by providing employees 24/7 access to paycheck information and deductions. This access allows employees to better understand their earnings, deductions and benefits, reducing stress and enabling informed financial decision-making.
Through Paycom’s software, employees gain real-time visibility into how their pay is calculated, empowering them to identify and resolve discrepancies before payroll is processed. This supports the financial wellness Jean Chatzky talks about, helping employees clearly understand their pay so they can spot and fix issues early, cutting down on financial stress.
By streamlining this process, Paycom’s solution not only meets team members’ expectations but also reduces HR’s administrative burden. Automation allows HR to focus on higher-value priorities, such as employee engagement and compliance, rather than spending time on manual data entry. In fact, a Forrester Consulting study commissioned by Paycom found that automated payroll software can cut payroll processing labor by 90%. That means fewer errors, fewer headaches and a more empowered workforce.
Now that they have a better picture of their paycheck, they can use this information to fix payroll errors in advance.
Beti®, Paycom’s industry-first self-service payroll technology, allows employees to verify their payroll data before processing, reducing mistakes and improving accuracy. It automates calculations, flags missing approvals and provides real-time visibility for HR, minimizing post-payment corrections. Paycom’s unified software ensures Beti integrates seamlessly with other HR functions, creating a smooth and efficient payroll experience:
- Time-Off Requests and the award-winning GONE® automatically adjust balances and route approvals to payroll.
- Time and Attendance syncs approved hours worked directly with payroll.
- Benefits Administration sends employee selections and deductions to payroll without manual entry.
Pay literacy is a critical step toward financial wellness. As Jean Chatzky wisely puts it, “Getting started is the first step.” Many people avoid managing their finances because they’re afraid of making mistakes, but understanding their pay is an empowering first step. By improving pay literacy, employees gain clarity about their earnings, deductions, and benefits, reducing stress and strengthening their sense of financial control.
With Paycom’s easy-to-use platform, employees can take charge of their financial journey. This leads to improved engagement, greater financial security, and a more productive workforce overall.
