Caring for your employees’ financial fitness is the right thing to do and good for your business
It’s sobering to realize that nearly 80 percent of Americans live paycheck to paycheck. That means four out of every five people have no cushion and live daily with the stress of whether they’ll be able to pay this month’s bills.
Some of your employees are a part of that statistic. It’s disheartening to think of the people you depend on and care about going through tough times. You might feel compelled to help, but is it any of your business? Does their financial situation affect you and your company?
Financial wellness is everyone’s concern, even employers. In fact, as your employees’ main source of income, health insurance and retirement plans, you are maybe best positioned to help.
Why is it important to improve employees’ financial fitness?
You care deeply for the people you work with. It’s a given that you have compassion for them and want their lives to be better. However, it’s also important to look at the business case.
Employees who are financially stable are more productive. They have less stress, are more focused and are less likely to miss work to deal with money issues. One study from Boston College found that employees with financial stress miss twice as many days as compared to their counterparts. That stress comes from uncertainty. Will they have enough to cover expenses? What if an unexpected emergency comes up? If they miss a monthly payment, what will happen?
Employees with financial worries are also less healthy. Stress is a major factor in heart disease and obesity, and it can speed up the aging process. Plus, those concerned about money are more likely to put off or even skip preventative care visits to the doctor because of the cost. Eventually that cost will come back to you as they deal with significant problems down the road and you pay more for their healthcare.
And finally, when people haven’t saved enough for retirement, they’re more likely to work longer. Older workers at your company mean higher salaries and, once again, higher healthcare costs.
What can you do about it?
Financial wellness includes all aspects of a person’s financial life. The seemingly easy answer would be to pay them more, and it’s definitely an option to consider if your employees are working more than one job or you have high turnover as they look for higher wages. But it may not be practical for your bottom line, and it’s not always guaranteed to fix the root of the problem.
True financial wellness is more about behaviors than paychecks. Savings, financial planning, good banking services and smart health insurance decisions can do wonders for someone’s household budget and long-term prospects.
Start with a basic money need: bank accounts. Take stock of how your employees do their banking. You might find some are underbanked or maybe even don’t use a bank at all. Many financial institutions offer group banking to businesses, which gives groups of employees special offers for checking and savings accounts and other services. Some even offer discounts on mortgages and other services. For you, having most or all of your employees at a single bank can simplify your payroll a great deal.
Next, look at your health coverage. Did you get the basic, off-the-shelf plan for your company benefits, or do you offer options for every budget? Some of your people may need a Cadillac plan with total coverage, while others could save a lot of money by choosing a high-deductible plan with a health savings account (HSA). And what about caring for kids and older parents? Dependent care plans let your employees set aside pre-tax money to help cover daycare costs or even assisted living.
Everyone’s lives can be made less stressful by having a solid retirement plan in place. If you don’t already, consider offering retirement benefits. Your program can be something as simple as a 401(k) plan all the way to comprehensive financial planning options that include retirement, education savings and more. And make sure ongoing education is part of the package so your employees can make smart decisions for their future.
Financial literacy in general is a great way to engage employees in bettering their financial lives. Some benefits partners have simple online tools for goal setting and planning. Others include personal finance classes and materials for everyday money matters. Some will even offer personal coaching for retirement and budgeting.
It can be overwhelming to think about how to take care of your employees’ financial needs on top of everything else you deal with running a company. So it’s important to find the right partner who can handle it all for you. Plenty of firms can offer a supposedly turnkey solution, and you’ll pay plenty for them. But few can do it all and customize a program for what your company needs. Reach out to a financial advisor and ask what they have to offer to your employees – and to you, too.
Ginny DeBardeleben is a trust services advisor at Pinnacle Financial Partners specializing in corporate retirement services. She is based in Pinnacle’s headquarters in downtown Nashville, TN. She can be reached by phone at 615-743-8809 or by email at Ginny.DeBardeleben@pnfp.com.