If the year 2020 taught us anything, it was that the unexpected can strike at any moment. Being financially prepared for emergencies doesn’t make them smooth sailing, but it makes the storm much easier to weather. And while you can’t make your employees’ financial decisions for them, you can give them the tools to be able to manage their finances wisely.
If you do so in the right way, your employees will feel supported, which will improve their job satisfaction.
The pandemic has dealt everyone a severe blow, particularly those lower down the employment chain. But perhaps it has also given us the shock we needed to improve our disaster preparedness and increase our safety net. What you can do as an employer is nudge your employees in the right direction to help them become more financially literate.
While in the past, the emergency that an emergency fund caters for may have seemed vague and unreal for many. But we can now see with startling clarity what such an emergency can look like—and that it can come out of nowhere. And while some people have been hit hard, hopefully more people will take steps to ensure that they are not caught off guard in another crisis again. Those that kept their financial stability but watched their peers get burned will really understand the necessity of that financial safety net.
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If you need a reason to help your employees save apart from pure altruism, consider the productivity aspect.
According to one study, 77% of Americans are worried about money constantly. Such worries impact peoples’ sleep patterns and physical and mental health. When people are sleep deprived and anxious, their productivity goes down—and this is a time when companies need their employees to be working at their best.
Improving your employees’ financial stability will go far towards improving their mental health—and a happy employee is a productive one.
You may think that your employees see you as simply their boss. But the truth is that many employees look up to their employers and trust their judgment. This means you are uniquely placed to make a difference in their lives through your advice and policies. But more than this, in a very real sense, you exert influence over their lives.
There are several concrete workplace policies you can implement to help your employees save money. So, what can you do?
If you offer your employees a 401(k) plan, set the highest savings percentage as the default. Of course, they can change it if they like, but in most cases, people are likely to stick with the default. And voila, they’re saving money.
Discount schemes or voluntary packages can make a difference in employees’ lives, and it frees up some of their salary for potential savings. The trick is to find out what your employees want. Then offer something that will really help them in their day-to-day lives.
Discounts on memberships to basic goods stores or supermarkets are a good place to start, but we recommend doing some research to tailor your offerings to your employees. Luckily, there are thousands of local and national retailers that offer discount packages, so you are spoilt for choice.
Whatever employee benefits, such as health insurance or childcare, or services like debt counselling you offer, make sure your employees know about them. Also, make sure all these benefits and services are easy to understand and make use of.
The same goes for the voluntary packages described above. Offering financial counselling services at your workplace is a great way to encourage your employees to make smarter financial decisions. But they need to know that this service exists, and that it’s anonymous.
If there are other ways that employees can generate income that won’t affect their work performance, talk to them about doing so. Whether it’s encouraging them to sell their creative works on Etsy, take paid surveys online, or start a side hustle like selling baked goods in the office, bringing opportunities like these to their attention can help. Plus, it promotes an entrepreneurial spirit and fosters useful skills that can benefit your business too.
This may seem difficult sometimes, but it pays to provide your employees with a little more financial flexibility during tough times. It may seem counterintuitive to allow employees to access their pensions to create more disposable income. But giving them a little wiggle room when it’s needed will help them understand the importance of emergency funds.
This support should always come with education and access to modeling tools so that employees know the impact that their choices now will have on their future.
Chances are, many of your employees have goods they could get rid of to make some extra money, and many other employees would welcome the chance to buy affordable second-hand goods.
Why not create a company-based system where employees can offer their used clothes, toys, furniture and other goods for coworkers to buy. This will make it a lot easier for employees not to waste money on new and expensive goods. Not everyone has the time or energy to trawl around thrift stores or online marketplaces.
Show your employees that you care about saving money by bringing in a homemade lunch, using public transport, or carpooling where public transport is not an option. Seeing the boss exhibit these behaviors shows employees they are possible, and that driving your own car doesn’t need to be a marker of success.
Financial advice from the boss can seem a little disingenuous if they don’t follow said advice themselves. Practice what you preach and set an example of all the little ways your employees could save money.
As 2020 has shown us, you never know when an emergency will arrive unannounced. 2021 is the perfect time to prepare financially for the next disaster by creating a savings safety net. Help your employees to do so through workplace policies, financial education, and setting a good example.
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