Unexpected expenses are a part of life. Whether it’s the washing machine suddenly breaks down or the car that needs new tires, surprise bills hit us all. For those who are financially fragile – living paycheck to paycheck and with little or no savings and credit – these expenses can be difficult to cover. All this uncertainty about paying bills adds to the stress. A study by PricewaterhouseCoopers found that 52% of employees are stressed about managing their financial situation.
This seems to be the most difficult for young workers, with 64% of Millennials reporting stress on their finances. Alok Deshpande, the founder of SmartPath Financial Education, warns that 30% of employees are less productive than their peers due to acute financial issues such as bad debts. So when the washing machine breaks down or the car needs new tires – and your employees don’t have the cash to handle it – what options do they have?
There are many different financing options for paying for planned and unforeseen expenses, but many of them can lead to a spiral of debt and getting out of it can be difficult. Paying cash for a large purchase can avoid exorbitant fees and avoid credit problems due to missed payments, but cash is not always available. This is why it is so important that employees are “ credit aware ” – to understand the hidden costs and fees associated with high risk credit options and to avoid making financial mistakes that can harass them for months. even years later.
Buying items on subprime credit or through high interest vehicles like payday or securities loans can be risky propositions, especially if a person already has a low credit rating. Ideally, understanding the options can help employees make the best choice to meet their short-term needs without compromising long-term finances. These options include:
There is no credit check, no interest, and no hidden fees. The employee can manage their budget more easily with these programs because payments never increase or change.
What employee financial stress is costing employers
The stress of money and credit debt has a mental and physical impact on workers, impacting health-related costs and drastically reducing productivity. The financial problems of the employees also become the problems of the employer. These include:
- Absenteeism. Employees in financial difficulty use more sick leave and miss work more often.
- Presenteeism. Although employees are physically at work, they devote time to activities unrelated to their work, such as talking to creditors.
- Health problems. Unhealthy workers produce a lower quantity and quality of work and result in higher health costs for both the patient and the employer. Distress from financial matters can contribute to irritability, anger, fatigue, and insomnia.
- Labor disputes. Delays, incomplete work tasks and accidents occur when workers’ personal problems interfere with their job performance.
What employers can do
Most employers understand that wellness programs can improve employee health and can even help employer results. But not all employers realize that the same concept applies to the financial health of their employees as well. Employees who are financially strong and without significant financial worries at home are happier and more focused on the job. Financial well-being and the workplace that promotes it can go a long way in providing solutions that increase productivity and peace of mind.
One of the ways that employers can help their workers achieve financial well-being is by providing a comprehensive package of financial well-being that includes access to budgeting information, educational webinars and, for employees. who need it most, an employee purchasing program. Employers are already aware of how voluntary benefits help achieve business goals.
A comprehensive financial well-being service is an influential recruitment and retention tool. A strong financial wellness program includes a basic financial education program, budgeting tools, free credit reports, and alternative credit reports. Resources can include:
- Personalized assessment and financial education
- Free traditional credit reports; alternative credit reports to obtain approval of financial products
- Personalized action plans; free individual coaching; incentives for engagement; budgeting app / website
Progressive businesses recognize the potential benefits in dealing with financial stress. They offer financial education and workplace financial wellness programs with the goal of helping employees change their financial behaviors and improve their financial literacy, including seminars on money management and planning. financial on site.
Others offer free, voluntary, liability-free benefits that include employee shopping programs. Employees enjoy better financial well-being and are less stressed. For employers, this results in productive workers who are engaged and empowered and an increased bottom line.
About the Author
Elizabeth halkos is the COO of Purchasing Power, a voluntary employee benefits provider of a purchasing program. She has over 15 years of experience in customer relationship development, sales, marketing and product strategy.