Benefits That Help Employees Manage Their Money, Not the Other Way Around

January 31, 2023

As an HR professional, you can offer programs to help employees with money issues. Here are just a few ideas.

Benefits That Help Employees Manage Their Money, Not the Other Way Around

Four out of five employers report that their employees’ financial issues are affecting their job performance. This is the major finding from a study by the International Foundation of Employee Benefit Plans (IFEBP).

The research shows employees are worried about:

  • Debt (66%of respondents)
  • Saving for retirement (60%)
  • Saving or paying for children’s education (51%)
  • Covering basic living expenses (48%)
  • Paying for medical expenses (36%)

And these concerns are affecting their health and work. They report:

  • Increased stress
  • Inability to focus at work
  • Less productivity
  • Being tardy or absent more

As an HR professional, you can offer programs to help employees with money issues. Here are just a few ideas.

Financial literacy education

The IFEBP research found that about half of the companies reported that their employees know little or nothing about personal finance. You can increase their knowledge by holding “Finance 101” workshops that highlight topics like secured versus unsecured debt, budgeting, and starting an emergency fund. Or you could reimburse them for the cost of an outside course, such as Financial Peace University.

Pay advance

Make sure your employees know there are options when they have a small short-term cash shortage. A pay advance benefit would allow them to access earned pay before payday. This then reduces their need for a payday loan – which charges a median rate of 38.5%.

Financial planning services

Many EAP programs include financial planning counseling or resources. Check your plan to ensure it offers this support. If it doesn’t, think about making it available another way.

Benevolence fund

Consider setting up a benevolence fund to assist employees experiencing a financial emergency or crisis. Employees can make voluntary donations, and employers often contribute too.

Some companies have employees serve a set term on a review committee. The committee evaluates applications confidentially and makes recommendations to approve or deny requests.

When employees donate, they feel good about helping their co-workers during a tough time, which can lead to a positive work culture.  

HSA accounts

If your company offers a high-deductible healthcare plan, make sure employees enrolled in it know about the benefits of an HSA account.

According to a Kaiser Health Tracking Poll, 45% of Americans said they’d have difficulty paying an unexpected $500 medical bill. Contributing to an HSA provides employees extra funds to cover their healthcare costs. 

Most people don’t realize their HSA balance is often just sitting as cash. Make them aware they can invest these funds through their HSA portal. It’s a great way to build savings in a tax-free manner that can be used for medical expenses post-retirement.   

For example, a 25-year-old invests $2,000 in an HSA every year until age 65, letting the balance compound year after year. At just a 5% return, the balance would grow to over $250,000. Then after retirement, they can withdraw these tax-free dollars to cover medical expenses. This frees up retirement income for fun things! (Money for travel, grandkids, hobbies, etc.)

401(k) loans

Remind employees they can take a loan against their 401(k)-account balance to help with money issues involving unsecured debt with high-interest rates. The interest rate is typically lower than a commercial loan.

And be sure they know if they default on the loan, the IRS will consider the balance a withdrawal, resulting in income taxes on the balance. In addition to taxes, an early withdrawal penalty must be paid by anyone younger than 59 and a half years of age.

Student debt programs

The Department of Education reports that federal student loans reached $1.6 trillion in 2020. This total is spread across 43 million people, or one in five working-age Americans. So it’s no wonder companies are looking at student debt assistance programs to attract younger employees.

Student debt relief is a hot topic in congress right now. Keep an eye on this ever-changing situation to gauge whether a debt relief program is right for your company.

Manager education

Managers can play a key role in helping employees struggling with finances. Be sure they know about your company’s resources so they can refer employees. It’s important for managers to know about these options and periodically communicate them to their employees.

When employees are saddled with financial worries, it’s like an elephant on their shoulders. You can help lessen this burden through a variety of benefits. Most will be relatively easy on your bottom line. They’ll improve employee retention. And they’ll lead to a more positive culture.

About The Author

Andy Holmes

Andy Holmes
Email As Chief Financial Officer, Andy oversees cash flow and financial planning for The Miller Group. With more than 14 years of experience, he analyzes the company's financial strengths and weaknesses, recommending strategic directions.