David Cummings on Startups

Financial Literacy in Startups

Written by

David Cummings

in

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At Pardot we noticed that many of our team members were asking questions about whether or not to put money in the 401k plan (which even had a company match). Then, as other financial questions came up, we realized that there was a real financial literacy challenge in the company, and, no, not just with the millennials.

To help, we hired a financial literacy coach that met individually with everyone interested and taught a six week course exclusively for employees during work hours (every Friday at 1pm). In fact, the first program was so successful that we did it again a second time. Pardot paid directly for the program and the financial literacy teacher didn’t sell any products or services.

Here are a few thoughts on financial literacy in startups:

  • While many people focus on big exits and love to talk about the future value of equity, the reality is that the financial basics aren’t well understood
  • Financial literacy can help people for the rest of their life by helping them make better financial decisions
  • More investment in people, especially to help them at a personal level, endears them to the company
  • Company benefits come in all forms and aren’t just related to good insurance and free food

Financial literacy is a real challenge and startups have the opportunity to help educate their employees. For many people, it’ll make a profound difference.

What else? What are some more thoughts on financial literacy in a startup?

Comments

6 responses to “Financial Literacy in Startups”

  1. Dave Avatar
    Dave

    More is needed on the front end before accepting offers from what u have found. No one has any idea the value of the full comp package. Coaching is needed here and recruiters don’t offer any help on non cash issues as they also lack the experience and financial motivation.

    Reply
  2. Alok Deshpande Avatar
    Alok Deshpande

    David, great post and often overlooked as a critical benefit. As Dave posted in the comment above, few employees understand the actual value of their benefits beyond comp. Sadly, only four states mandate financial literacy in high school and traditional financial planners focus on people with >$250K of investable assets. In other words, the average startup employee is forced to fend for themselves and often living check to check.

    True, objective financial wellness programs can be a powerful tool to help employees see their path forward within the startup community. I loved working with the Pardot team — over 50% of the employees attended the workshops and coaching sessions. More importantly, the team became more comfortable discussing money and sharing best practices.

    I always tell employers there are two sides to compensation — how much you pay them and how much they keep. If they’re not doing the second, the first never feels like enough.

    Reply
  3. Mark Gavagan Avatar
    Mark Gavagan

    The Simple Dollar (http://www.thesimpledollar.com/) blog encourages frugality and often provides good advice about life, goal-setting and making good choices. I’m a blog subscriber, but have no other relationship with them.

    Reply
  4. Matt Tarkenton Avatar
    Matt Tarkenton

    David, I’d be interested in the name of the financial literacy instructor. We’d like to do the same here at our company. My wife is enjoying being part of ATV!

    Reply
    1. David Cummings Avatar
      David Cummings

      Great. We worked with Alok at http://smartpathfinancial.com/ and highly recommend him.

      Reply
  5. VAVA Avatar
    VAVA

    I think most of the working class is financially illiterate as they invest only on recommendations of a few consultants who are themselves semi litterate.

    Reply

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