The almighty dollar. Money makes the world go ‘round, but it can also make your head spin ‘round. For a vast majority of us, a primary cause of stress is our finances.
According to PwC’s 2016 Employee Financial Wellness Survey, employees are at the highest level of stress, due to finances, in five years. A Harris Poll conducted for Purchasing Power found that 80 percent of employees are under financial stress.
This stress has a negative impact on both employees and their employers. Stress costs businesses an average of $300 billion a year due to stress-related healthcare and missed work.
Similarly, financial stress also causes employees to lose sleep. According to a study by Financial Finesse, 6 out of 10 employees lose sleep over their financial situations. As a result, the average employer suffers a loss of 11.3 days of productivity per year, per employee.
Helping your employees manage their financial stress is critical to a healthy and successful business. These are the top five benefits that will ease your employees’ financial stress.
1. Financial Literacy Education
One of the first, easiest, and best things your company can do to lessen your employees’ financial stress is to educate them on financial literacy.
The President’s Advisory Council on Financial Literacy defines financial literacy as “the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial well-being.”
Financial literacy aids employees by giving them the knowledge and ability to reach self-sufficiency in their daily financial lives. If your employees are financially illiterate, according to Investopedia, they can fall victim to predatory lending, subprime mortgages, fraud, and high-interest rates.
All of these results of financial illiteracy can lead to poor finances and large amounts of financial stress. Your financial literacy education plan should teach employees the basics of personal finance that apply to their everyday lives.
2. Financial Counseling
The next benefit you can provide your employees to decrease their financial stress is credit counseling. Credit counseling allows employees to discuss their debt and credit with a trained financial professional.
This counseling can be hugely beneficial to your employees as national debt continues to rise. Credit card debt is especially prevalent in the U.S. As of December 2016, the average U.S. credit card debt reached $16,061, according to NerdWallet.
Additionally, in a study by the Alliant Credit Union, 37 percent of respondents named paying off credit card debt as one of their top financial goals. Your staff wants to eliminate their debt, and personalized financial counseling can help them do so.
Going through credit counseling gives your employees a personalized action plan, budget, repayment strategies, and targeted advice to help them deal with their credit and debt.
These tools allow your staff to understand their financial situation, and develop a plan to achieve their financial goals.
3. Retirement Savings
The most obvious, yet arguably the most important, benefit you can offer your employees is a retirement savings account. Retirement savings accounts come in two forms: defined contribution and defined benefits plan.
Defined contribution plans, such as a 401(k), give employees tax benefits while giving them an easy path to save for their retirement and their future. These accounts offer tax-based incentives that make it worthwhile for employees to save, and to save sooner rather than later.
Saving for retirement is an enormous issue for your staff today. According to Time, 1 in 3 Americans have $0 saved for retirement. On average, the median for all families in the U.S. is only $5,000, and the median for households with some savings is $60,000, according to CNBC.
Retirement savings are a serious source of stress for many Americans. A survey by Schwab Retirement Plan Services found that 40 percent of employees named saving enough money for a comfortable retirement as a significant source of stress.
4. College Savings Account
A college savings account, or 529 plan, is beneficial for anyone who plans on attending college or wants to support a relative or a friend who plans on attending college. College tuition is rising, and it is important to save, to prevent accruing massive amounts of debt.
These 529 plans give employees tax advantages for saving for college. Earnings are not subject to federal tax and are not subject to state tax when used for qualified education expenses.
Qualified education expenses can include tuition, fees, books, room and board, computer technology, and related services such as Internet access.
Students in the U.S. have racked up a collective $1.3 trillion in student loan debt. College savings accounts help your employees to avoid the stress of exorbitant school loans.
5. Student Loan Repayment
Similar to 529 plans, student loan repayment assistance helps your staff to ease the stress of accumulated student loans. The average graduate will leave college with $37,172 of student loan debt.
Student loan repayment is a voluntary benefit, offered by an employer, that pays back a portion of an employee’s student loan debt on a monthly or annual basis.
Typically, a company agrees to pay a specific amount each month, or in a lump sum after a certain amount of time. This money can be applied directly to the principal, which also helps to lower the amount of interest each month that an individual has to pay from that point on.
The American Psychological Association has reported that every year, since 2007, Americans have named money as their top source of stress every year. These five benefits can help your employees avoid the negative impact of financial stress.