Life is unexpected. Twists and turns will come up out of the blue. What happens when an employee has an accident or a medical bill that they are not expecting? Having emergency savings is essential for financial health, and an employer can help an employee build a rainy-day fund.
40% of Americans can cover $1,000 for an emergency expense, and 18% of Americans have three to five months of living expenses saved. Now is the time for employers to help their employees reduce financial stress in the workplace, especially with COVID-19 still being in play and causing many financial strains and unexpected life turns.
Having an emergency fund, no matter the size can significantly impact employees’ finances and attitudes in the workplace. While each employee does have monthly financial obligations, expenses that come up as unexpected are:
- Health and medical expenses
- Job loss
- Car and home repairs
- Travel expenses
- Emergency pet care expenses
Anything of these factors can happen at any time. An emergency fund can carry an employee and their family through difficult times, and being an employer who encourages this will go far. Signs employees have financial crises in the workplace include decreased productivity, inability to concentrate, tardiness and absenteeism, and reduced engagement.
Understanding and learning employee’s financial situations will help employers understand the next steps and options to help build emergency savings funds. Making employees a priority by investing in stronger and personal relationships, maintaining an open-door policy, and recognizing achievement will all be linked to trust where an employee will feel more comfortable coming to an employer with financial concerns.
What are effective ways employers can help employees build emergency savings?
After employers understand employee’s financial concerns, they can help employees start emergency savings plans in various ways. Encouraging employees to act now and start thinking about retirement and savings will allow them to reach their goals. Helping create reasonable goals is essential, but educating employees on how to improve their financial situation by teaching them the skills to keep track of their spending, budgeting, saving, and financial management will go a long way. For example, an employer can hire a financial advisor to host a webinar focusing on emergency savings funds.
With more options for employers to provide to their employees, employees can put after-tax money into a savings account alongside a retirement plan, allowing them to have a return on their investment. Some employers will match employee contributions dollar-for-dollar. Another smart strategy is to get involved in a wellness program such as Acorns that rounds up an employee’s purchases to create an emergency savings account. Financial wellness programs are always an effective way to educate employees on starting an emergency savings fund, like Financial Fitness Group’s Financial Fitness ACADEMY.
Companies like Kroger and SunTrust Bank are leaders helping their employees invest in eliminating their financial stress with factors like creating an emergency savings fund. COVID-19 is one of the unexpected events that has influenced people’s financial actions. Now is a great time to help employees be educated and encouraged to take charge of their finances in case of an emergency.