How to Beat the Broke Budget Blues

March 25, 2018

Eight tips to strengthen employee financial management

Money—it keeps us awake at night and makes us worry about the future. Financial management challenges will strain the majority of your employees at one time or another. A study by Bankrate found only 37% of Americans can cover an unexpected $500 expense with savings. In its 2017 Global Benefits Attitudes Survey, Willis Towers Watson revealed more than one-third of employees believe their financial worries are negatively affecting their lives—and that spills over into their work lives.

 

Employee financial struggles also cost their employers

Employees facing financial hardships tend to underperform on the job and are less engaged, according to Vincent Antonelli, a senior consultant at Willis Towers Watson. Well-known personal finance expert, Dave Ramsey, notes that employees with money problems ask for more payroll advances and 401(k) loans, are absent more frequently, and switch employers more often (probably trying to increase their salaries). Ramsey’s blog also quoted Dr. Thomas Garman, a Virginia Tech professor who stated that, “Workers waste 20 hours of company time a month thinking about and dealing with personal finances.”

 

Challenges in establishing employee financial wellness programs

There are a few potential road blocks employers should be aware of when planning financial wellness programs. First, how can you alleviate employee privacy concerns? An employee at a bank or insurance company would not want to be seen in a budgeting or debt management class, for example. One way to ensure employee privacy might be provide access to online financial classes presented by third-party providers. In a 2016 report, SHRM found that:

  • 24% of organizations offered employees online financial/investment advice.
  • 27% offered one-on-one advice.
  • 22% offered group or classroom financial advice.

On the employer side, companies need to understand the legal ramifications of providing any type of financial advice as part of the employee benefits package. Could  employees or retirees sue if they used advice that lost them money? Consult with your legal counsel about the potential fiduciary responsibilities involved in sponsoring or presenting a financial wellness program.

 

Eight ways to help employees achieve financial stability

  1. Personalize the message to engage employees at their stage of life and financial needs. Financial wellness means different things depending on your age and your goals. Millennials may be struggling with student loans or saving for a down payment on a home. Middle-aged employees are saving for retirement and also spending on children’s needs, such as college education. Older workers may be facing rising medical bills and late-term retirement jitters.
  2. Offer lunch-and-learn workshops where employees can brush up on financial skills during lunch. Of employers surveyed by Fidelity/National Business Group on Health, 82% said they would offer this type of classes. Ask your benefits providers if they offer educational services in which you could enroll employees.
  3. Provide access to online courses on important financial topics such as creating a budget, setting aside emergency savings, tackling debt, funding goals, and ensuring adequate retirement savings.
  4. Consider one-on-one counseling as a financial wellness benefit for employees who are struggling. Counseling should be provided by a reputable, outside firm.
  5. Automate 401(k) enrollment to get new employees off on the right foot for retirement savings. It is easier to never see the additional amount in the paycheck than to make the decision later to voluntarily lower a paycheck. About two-thirds of 401(k) plans now use automated enrollment, with an average starting savings rate of 3%.
  6. Encourage college savings with 529 plans to help employees put the kids through school. It costs middle-class parents more than $230,000 on average to raise a child, not including college expenses which can add as much as $200,000 more at a private university.
  7. Provide credit monitoring to help employees become more aware of their credit score and how financial decisions affect it. You’ll also save employees from tremendous financial stress if the monitoring helps them catch potential fraud or identity theft early.
  8. Consider student loan repayment as a possible benefit to help younger workers. With so many Millennials forced to take out large loans to fund college, this benefit could help with both talent acquisition and retention.

 

Make benefits management simpler

When you consider adding new benefits to your plan, such as financial wellness programs, you will increase the complexity of benefits management. It is important to have the right tools at your disposal to manage the growing array of voluntary benefits needed to compete for top talent. Automation of benefits administration with Asure Software’s Human Resource Management solutions can help you save time, stay organized, and deliver a highly effective benefits plan.