Are my employees struggling to build rainy day fund?
Lack of savings is a real problem across the country for employees, including yours! A whopping 53% of adult Americans report living paycheck-to-paycheck , while another 69% report having less than $1,000 in savings.
Many employers are shocked by these stats. If you pay your employees well, shouldn’t they be able to save? The answer is more complicated than you might think. Many factors contribute to Americans’ struggle to save, including:
• Rising costs of living
• High levels of debt, often at high interest rates
• Lack of financial education and not seeing saving as a priority
• Bad spending habits
…And more. Regardless of the cause, the lack of a rainy-day fund certainly has its side effects, from an inability to handle emergency expenses, to delaying medical care, and even failing to retire on time – all of which lead to financial stress.
How can I help employees start saving?
Employers play a significant role in enabling their employees to grow savings and secure their financial futures. Providing employees access to financial literacy tools is a great first step. These resources will allow employees to better understand the importance of saving and the impact their spending habits may have on their financial wellness. Financial literacy can also help employees create realistic savings goals and practical plans for achieving them.
In addition, providing access to a 401(k) or other retirement account, and implementing automatic contributions as the default, is shown to increase employee participation in the company’s offered retirement plans. These accounts are set to be a sound investment with a high growth potential over the course of several years, and the automatic payroll deductions make it seamless to deposit funds. Plus, with an employer match, you can motivate employees to participate in the plan.
Another way for employers to support their employees is through student loan assistance. There are many employee benefits that offer methods for tackling student debt, with or without employer match. It is also worth looking into offering employees FSA’s and/or HSA’s. These savings accounts are both tax-advantaged, and most importantly, must be spent on healthcare related expenses. This ensures that employees never have to delay medical care, that they feel less stressed, and that their savings are being spent wisely.
Finally, you can offer a benefit that builds traditional savings accounts for employees through automatic payroll deductions. Unlike 401(k) plans, HSA’s, or FSA’s, these accounts give employees the flexibility they need to put their savings toward whatever they may choose. However like the other benefits, the automatic payroll deduction makes depositing money into a savings account simple, so employees are more likely to build a rainy day fund that they can use for emergencies or other purposes instead of borrowing from their retirement.
Why Kashable?
Kashable low-cost loans are a great alternative to borrowing from retirement, helping employees to ensure that these savings are left untouched and free to grow over time. Plus, using a Kashable loan to tackle high-interest debt can help employees to minimize their expenses over the long term, giving them the opportunity to stow away a little extra each paycheck. Kashable even offers the Financial Literacy tools employees need to create a responsible savings plan, whether or not they take a Kashable loan. Learn more at Kashable.com
Want to learn more about financial wellness? Check out our other videos on 401(k)’s and Credit Scores.