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Employee benefit programs are in the spotlight because they are an effective way to attract and retain talent. They’re not the only way to attract and retain employees – things like quality of management, professional development, etc. are also important components of the employee value proposition (EVP). But benefits are one of the first things we think about, after compensation of course.
When we think about benefit programs, one of the things I’m hearing more about is financial wellbeing. Personally, I think this is great. Many people do not receive any type of education regarding their finances and have to rely on what they’re exposed to. If the people around them do a good job of managing their finances, then that can be helpful. But, if the people around us don’t manage their finances well, then we may adopt those poor habits.
I was at a meeting recently where we were discussing financial wellbeing, and someone brought up that some financial wellbeing programs only focus on investing and that might not be enough. So, I thought it might be helpful to put together a list of things that organizations might want to consider when they are putting together a financial wellbeing program.
Pay Flexibility. Many organizations are looking at when employees get paid and how they get paid. Some organizations offer employees and freelancers the option to get paid at the end of their shift. They also give employees and freelancers the option of having their pay direct deposited into a traditional bank account or via debit card. Giving employees control over when and how they receive their pay can help them manage their finances better.
Budgeting. I saw an article on the Intuit MintLife blog that said 65% of Americans don’t know how much money they spent last month. Learning how to properly budget is important for financial wellbeing. Budgeting might not be the answer to all of our money challenges, but budgeting might help us understand where our money goes so we can make educated decisions. I’ve written before about how Mr. Bartender and I have used budgeting strategies to save ourselves significant dollars when food shopping. Without monitoring our budget, I’m not sure we would have recognized our spending habits, except to say, “We spend a lot of money on food.”
Emergency Savings Accounts. In a report by Bankrate.com, only 23% of Americans have emergency savings to cover six months of expenses. And 26% of all Americans have no savings whatsoever. I’m hearing that employers are starting to offer employees ways to funnel payroll deduct monies into an emergency savings account. This is popular with industries where there are peak/off peak employee schedules. It helps employees build up a little cushion that they can fall back on when hours are shortened.
Investing. I ran across an article that said only 52% of organizations offer an employee-funded retirement plan (i.e. 401(k) or similar) and most of them are large organizations. Employees need to have the ability to save for the future. If you’re an employee in the U.S., the Social Security program isn’t designed to be an income replacement program. I’m not here to debate whether it should be. The point is . . . it’s not currently intended to be used that way. So, people need to save on their own. An easy way to do that is via payroll deduction.
Cryptocurrencies. Finally, I want to toss out one more topic that should be considered for financial wellbeing. There’s lots of talk about cryptocurrencies right now. Some countries are making forms of crypto legitimate currencies. Some people are asking to be paid in crypto. Even if you’re not thinking about becoming a crypto miner, it could be helpful to understand more about crypto. According to Pew Research, about 16% of U.S. adults have invested in, traded, or otherwise used a crypto currency.
Organizations and employees want the same thing here – to manage finances well. But we have to make sure that financial wellbeing programs cover the right things. Personal finance is getting more complex. Let’s give employees the tools they need to keep up with today’s finance.
Image captured by Sharlyn Lauby while exploring the streets of Las Vegas, NV19