Own a small business? Why It Pays to Skip “Financial Wellness” Programs and Offer This Instead
Might as well spend your money on something that will have an impact.
Key Points Many companies offer different types of financial wellness programs to their employees. These programs are not very interesting for people without money in the bank. A better use of your resources is to offer your employees the opportunity to build emergency savings.
As a small business owner, your resources may be limited. You may not be able to provide your employees with the generous 401(k) consideration you would like to provide or benefits like premium health insurance and on-site meals.
But it’s important to focus your limited resources on the benefits that will really impact your employees. And that means knowing which ones to ignore and which ones to support.
You can skip wellness programs
Many companies make it a point to provide their employees with financial wellness programs. These programs are designed to help employees do things like invest their money and work toward long-term goals.
These programs are appropriate in certain situations. The problem, however, is that many workers today are in a position where they cannot benefit at all.
A recent SecureSave survey found that 74% of Americans live paycheck to paycheck. And 67% don’t have enough money in savings accounts to cover an unexpected $400 expense.
Workers in this situation don’t need financial wellness programs, insist Devin Miller, CEO of SecureSave, and financial expert Suze Orman, co-founder of SecureSave. It is because the workers of this boat do not want and cannot participate. After all, what’s the point of talking about investment strategies and asset allocation when you don’t even have enough money in the bank to replace a dead car battery or fix a faulty sink at home? ?
A better perk to offer employees, according to Miller and Orman, is an opportunity to seamlessly build emergency savings. And that’s what SecureSave does. It partners with companies to set up workers with automatic payroll deductions. Only, instead of the money going into a retirement plan, it’s going into an emergency savings account that workers can tap into as needed without penalty.
A pitfall that many people run into is that they actually have money in a retirement plan. It’s only when a need for short-term cash arises that they can’t dip into their retirement savings without facing a huge penalty. A dedicated emergency savings account could help workers keep their nest eggs intact and avoid penalties when unforeseen circumstances, like sudden home repairs or medical bills, arise.
Meet the most basic need of your workers
If you’re thinking about offering a financial wellness program to your team, you may really have the best intentions. And if you have reason to believe that they will benefit from it, then don’t hesitate, go for it.
But before implementing this program, think about your typical employee. Do they make $40,000 a year or $140,000? Are they in a good position financially or are they more likely to get by?
Helping your employees build emergency savings is one of the most important things you can do for them. Of course, if you’re able to raise salaries to help your employees increase their cash reserves, that’s even better. But if you can’t, it might be worth exploring your options to help workers build the cash reserves they need to buy financial protection.
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