How Employers Can Help End Employee Financial Distress
Employee health and wellbeing is a top priority for HR professionals. It can be easy to spot signs of physical illness, but not all issues are so apparent. Financial distress can be harder to identify, but is increasingly common and leads to a lack of productivity and absenteeism. Many employees have never taken a personal finance course or used personal finance software. However, the good news is you have the power to assist your employees in bettering their financial situation. Here are some common financial hardships and ways employers can help end employee financial distress.
Types of Financial Issues Experienced by Employees
Employers who understand that their financial responsibility for their employees goes beyond providing a paycheck tend to see an improvement in worker productivity and retention. Since most employees have not received financial education, many look to their employers to provide financial wellness guidance and resources. Without this guidance, employees may have serious financial challenges that prevent them from enjoying their work and their life outside of work.
Millennial Woes
Millennials face financial challenges unique to today’s economy. For example, high student debt, low income, tight credit, and high housing prices all contribute to high levels of financial stress. Additionally, these individuals are paying rent, unable to save to buy a home, and in need of financial guidance. On top of these financial hardships, SHRM notes pay raises aren’t likely to keep up with inflation, further adding to the toll on millennials’ financial health.
Double Debt Dilemma
In addition to student loans, older borrowers are taking loans against their 401(k) plans. CNBC refers to this as a “double debt crisis”. The number of people with 401(k) loans and student debt is increasing. Meanwhile, 401(k) loan rates are on the rise, which further adds to the dilemma. And on top of it all, these borrowers often carry a long term mortgage, which may take decades to pay off.
Medical Debt
According to LendingTree, nearly 1 in 4 Americans have medical-related debt. Unfortunately, one-third of medical loan borrowers use savings to pay for the medical bills. Medical debt is a significant contributor to stress and the majority of borrowers say they have lost sleep over it. This financial stress leads to an endless cycle of stress-induced medical bills. In other words, stress leads to medical issues, which leads to more medical debt, which leads to more stress.
Student Loan Repayment Pause Ends
Federal student loan borrowers were offered temporary relief in the form of a repayment pause in 2020. However, starting January 2022, loan payments are resuming. This is likely to cause significant challenges for workers who are still recovering from unemployment or underemployment and managing pandemic-related healthcare costs. As a result, employees facing these challenges need guidance on how to develop a budget, analyze cash flow, manage debt, and reduce interest payments.
Financial Workplace Wellness Programs and Perks
Financial workplace wellness is a perk many employers offer to help their team with the challenges mentioned above. The programs focus on important financial matters, for example, budgeting, building credit, and reducing debt. By offering a financial workplace wellness program, you can positively affect the financial wellbeing of your employees.
The 101 Financial Workplace Wellness program provides financial education to your employees with one-on-one classes and a personal instructor. As a result of the financial skills taught in this program, 46% of our students pay off their student loans in full in 2-5 years, including doctors and other high-debt professions.
Support your employees battling debt by providing a confidential financial education program. Having a third party provide this instruction grants your employees the confidence that their financial situation will remain private and confidential. Furthermore, it prevents a conflict of interest and reassures employees that addressing their financial stress will not adversely affect their situation in the workplace.
In conclusion, your employees’ health and wellbeing is an important factor in your business and company culture. When your employees feel their finances are in order, they are happier, more productive, and healthier.
Find out how 101 Financial’s Workplace Wellness program can help your employees get out of debt and reduce financial stress.