Debt. It’s a four-letter word no one likes. American households carried $13.3 trillion in debt at the end of June 2018, according to Federal Reserve records. That’s a lot of money owed in mortgages, student loans and credit cards, just to name a few sources of debt.
Chances are your employees owe some it and are worried about how they are going to pay it back. Sixty-six percent of employees struggle with and stress over debt while 48 percent worry about covering basic living expenses, according to a survey conducted by the International Foundation of Employee Benefit Plans (IFEBP).
That’s a hefty burden on your employees that impact their health and your business. Those with financial woes report fatigue, headaches, depression or other ailments and are also twice as likely to report poor health overall. This dominoes into tardiness, lack of attention, additional sick days, increased absenteeism and lower productivity levels.
Half of workers age 60 and older plan to keep working until at least age 70, and a further 20 percent suggest that they’ll never retire, according to a survey by CareerBuilder. At the root of this problem is concerns about money; one in three respondents to the above survey suggested that they aren’t sure how much money they even need to be able to retire, with most citing a shortage of investment opportunities and lack of knowledge about how to invest as significant barriers.
Money woes don’t just apply to your more senior staff members; millennials also expressed concern that they weren’t moving as quickly as hoped to their own “financial goals” such as home ownership or paying off student loans.
But why is having financially savvy workers a boon for your business? When employees are under financial duress, they may consider jumping ship for a higher paying job in order to make ends meet. This means you have a high turnover which is not good for morale and productivity or the bottom line as you spend resources looking for a replacement. Another avenue for employees to secure their finances is to take on an additional job, which can mean that they can dedicate less time (and brain power) to your company.
So what can you, as a business owner, do to boost the financial savvy of your workers?
Is your compensation structure fair to your employees? Is it reflective of your local market, job types, and your businesses financial situation? Does it include a clear structure that tells employees what they need to achieve in order to get a salary increase or performance bonus or include any other incentives? If you haven’t fleshed out all these details, you are leaving your workers with significant questions about their financial future with your company.
Thirty-six percent of employees in the IFEBP survey cited medical expenses as a debt they worry about. The statistics around medical debt are staggering—45 percent say an unexpected $500 medical bill would cause them hardship and 60 percent of those with insurance deplete their savings to pay medical bills. In fact, medical debt is often the number one reason a person will file for bankruptcy.
Another great way to promote employee financial security is to give them peace of mind through your benefits packages. If you can provide a health insurance program that takes some of the financial stress out of doctor’s visits – such as a low deductible or minimal copay – you can significantly alleviate the burden.
In addition to offering a comprehensive benefits program, educating your employees about the benefits and how to use them is key.
As the CareerBuilder survey revealed, there are a lot of questions about what workers should be doing to prepare for their financial futures. Human resources can provide an avenue for training on the basic elements of financial planning and security, including 401ks, Roth IRAs, pensions, and everything in between.
A robust Employee Assistance Program can offer additional resources such as tailored financial education offerings on topics such as student loan repayment and general financial planning, or even financial planning experts.