Without adequate savings in a bank account, a relatively minor financial molehill can easily turn into an insurmountable mountain for your employees. Unfortunately, many will attempt to rectify the financial emergency with a high interest-rate credit card — if available. Some will have no option other than to turn to the exorbitant rates of payday loans. They may even have to mortgage their future by tapping into their employer-sponsored retirement plan, such as a 401(k). For the majority of Americans with little to no access to affordable credit, lack of savings can be very costly and derail their financial goals.

Fortunately, we can help. As one of the largest, oldest, and most comprehensive financial wellness providers in the U.S., FinFit can help your employees develop healthy savings habits and create a plan to start saving today. Read on for a deeper dive into the ins and outs of savings accounts.  Click here to request a demo today.

What Is a Savings Account?

As a cornerstone of personal finance, a savings account is a type of deposit account offered by banks, credit unions, and other financial institutions. A basic short-term savings vehicle allows individuals to set aside money for a rainy day, special event, vacation, or any other financial situation that may arise.

A savings account should provide easy access to make manual or automated deposits, empowering your employees to securely and confidently save money. As an added bonus, the best savings accounts will pay interest as their funds build, accumulating annual yields. Some online banks and online savings accounts offer high-yield savings accounts that pay higher rates and can have minimal to no monthly fees.

While there are several types of accounts, including brokerage accounts, that do earn interest and appreciate, savings accounts are unique in they are insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC). The FDIC is the main federal regulator of banks chartered by states that are not a part of the Federal Reserve System. In either case, the FDIC’s backing offers extra peace of mind: in the event the bank fails, this agency will reimburse the savings balance up to the allowable limit of $250,000.

How Do Savings Accounts Work?

To get started, employees need to open a savings account at a FinFit or another financial institution and deposit money into it. As long as the funds are left in the account, it will earn interest. With many automated programs and direct-deposit options available, employees can conveniently grow their balance as they work to achieve their unique savings goals, such as:

• Emergency savings account
• A family vacation
• Down payment on a house or real estate
• Down payment on a vehicle
• A just-because savings account

Depending on the financial institution, a savings account may be free to open and maintain, which means there are no monthly maintenance fees associated with the account. FinFit savings accounts are fee-free, with no monthly maintenance fees and no minimum balance requirements. Other financial institutions may require individuals to maintain a minimum balance, such as $500 to avoid a monthly maintenance fee. When performing evaluations for different savings accounts to offer your employees, make sure you evaluate the unique parameters of the account which can include key elements like:

• Minimum initial deposit amount
• Minimum account balance requirements and
• Monthly or quarterly withdrawal limits

Are There Different Types of Savings Accounts?

Because of the variety of potential needs, individuals can open one or several savings accounts, including a small business account. Each account can be earmarked for a specific purpose. Ensure the account affords the ability to easily withdraw from the account with minimal restrictions, in the event funds are needed to achieve savings goals or handle a financial challenge.

Are There Fees for a Savings Account?

The number of and type of fees for a savings account varies from institution to institution. Traditionally, most financial institutions have restrictions on how often the account can be withdrawn penalty-free. For example, a financial institution may allow up to six savings account withdrawals in a quarter. If this withdrawal limit is exceeded, the financial institution may charge a marginal fee or require conversion of the savings account to a checking account or Money Market account with more flexible withdrawal functionality.

Understanding Savings Account Interest

Savings accounts that have strong Annual Percent Yields (APYs) will help the balance grow more quickly. When money is deposited into a savings account, it empowers the bank to lend money to others. As a result, the savings account earns interest on the money as the financial institution’s way of saying thank you. However, savings accounts in general will have lower initial deposit requirements, lower monthly maintenance fees, lower monthly balance requirements, which means lower APYs.

Savings Accounts vs Other Types of Investments

In addition to savings accounts, there are a number of other short-term savings vehicles available. Once employees have paid down debt and established a basic savings account, they may have the opportunity to broaden their investment strategy. Some of the most common are listed below.

Money Market Accounts

Money market accounts (MMA) often combine the best features of savings accounts with checking account options, such as check-writing abilities and even debit cards. Money market accounts tend to pay higher APYs compared to savings accounts because the funds may be invested in mutual funds or similar vehicles. However, MMAs usually have significantly higher balance requirements so it’s important to read the fine print closely.

Certificates of Deposit

Certificates of Deposit (CDs) are engineered to hold funds for a predetermined term, such as three months or three years. During the term, individuals are unable to withdraw money from the account unless they pay a penalty. The longer the term, the higher the interest rate may be. At the end of the term, the original principal plus any accrued interest may be withdrawn.

Cash Management Accounts

Cash management accounts (CMAs) are a relatively new short-term savings vehicle offered by robo-advisors or investment firms. These accounts do pay interest but lack the security and insurance of a savings account.

Savings Accounts vs Spending Accounts

Now that we have laid the groundwork by explaining the ins and outs of a savings account, let’s review the benefits of having a spending account associated with a savings account.

The most significant difference between a spending and savings account can simply be boiled down to the names of the accounts and their inferred meaning.

1. Spending accounts are specifically designed for daily spending. Almost all spending or checking accounts will come with a debit card; some may include check-writing privileges, and a very high number of withdrawals.
2. Savings accounts are designed for saving. Because of this, the savings account may not have direct check-writing privileges from the account. If the savings account is linked to a spending account however, it likely offers the ability to withdraw funds via an ATM card. Savings accounts traditionally limit the number of withdrawals allowed during a given time period.

Spending accounts generally offer an unlimited number of withdrawals and the least encumbered access to funds. Because of the inherent purpose of a savings account, funds deposited into the account are generally not as accessible. Most financial institutions will limit the number of withdrawals allowed from a savings account within a period. If the number of allowable withdrawals is exceeded, the account holder may be subject to a fee. This practice was previously a federal requirement, but it was relaxed back in April 2020 due to the financial distress caused by the COVID-19 pandemic.

Interest Earned on Savings Accounts vs Spending Accounts

Another differentiating factor between spending and savings accounts is usually the interest rate. Virtually all savings accounts will pay some percentage of interest on deposits, even if it is minimal. Although spending accounts traditionally do not pay interest, some financial institutions do offer nominal rates to encourage higher balances.

For example, a spending account may offer interest for those who maintain an average daily balance of $25,000. However, keeping such a high balance in a spending account is usually not recommended — unless there is a specific reason for the funds to remain accessible. Otherwise, a savings account would be optimal to allow the money to accrue interest.

Fees for Savings Accounts vs Spending Accounts

Today, there are usually several ways to avoid fees on both spending and savings accounts. Some of the most common fees associated with savings and spending accounts include:

• Monthly maintenance fee: If an account has a monthly maintenance fee, it can typically be circumvented by maintaining a minimum balance. Ideally, your employees will have access to fee-free spending and savings accounts like the FinFit Spending and Savings Accounts.
• Overdraft fee: Only spending accounts have an overdraft fee.
• Out-of-network ATM fee: While commonly associated with spending accounts, savings accounts may also charge fees for withdrawals made on ATMs out of the financial institution’s network.
• Withdrawal limit fee: If the monthly or quarterly withdrawal limit set by the financial institution is exceeded for a savings account, fees may be assessed.

Should Your Employees Open a Savings or a Spending Account?

Both! Spending accounts and savings accounts are complementary — not competitive. Both of these accounts are key to managing a budget, improving financial health and achieving financial goals. When both accounts are opened with the same financial institution, it makes financial management easier. Most importantly, the savings account can then serve as a buffer or as overdraft protection for the checking account.

Checking Account + Savings Account = Overdraft Protection

Overdraft protection is a popular option that uses the funds in a savings account as a security blanket in the event an employee overdraws their checking account. For example, if there is only $5.00 in the checking account and the attempted purchase value is $25.00, the transaction could be:

• Declined, or
• Paid by the bank, which could generate a hefty insufficient funds fee.

Overdraft protection helps employees avoid these unfavorable outcomes and protect their hard-earned money. As long as sufficient funds are available in the savings account, an overdraft protection program would automatically move the funds to the spending account to cover the transaction.

How Much Should Employees Keep in a Savings Account?

The ideal balance to maintain in a savings account will vary by employee, based on their needs and financial goals. An excellent place to start is by establishing an emergency saving account for unexpected expenses. The goal for this account should be to have anywhere from three to six months of living expenses to protect against job loss or an emergency. Once an emergency savings account is established, employees can focus on opening specific savings accounts for life events, increase allocation to pay off debt to improve their credit score or establish a downpayment for a real estate purchase.

Do Your Employees Think They Don’t Make Enough to Save?

One of the most common and dangerous sentiments many individuals must overcome is the notion that “I don’t make enough to save anything.” First and foremost, no matter how much you make, you can save. Saving as little as $10 to $15 a week can quickly add up after a few months. Most financial institutions make it very easily to establish automatic transfers from checking to savings, or employees can allocate money directly from their paycheck to be deposited into their savings account every paycheck. Stack saving is another great way to slowly increase the amount saved.

The key to stack savings success is to start small. If your employees can get in the mindset of putting a small amount of money away, they will be able to increase the amount over time. Behavioral change for their spending and savings accounts. It might sound impossible for many of your employees if their goal were to save $1,378 in a year’s time. That’s a big number. But what if they had to put just $1 into savings this week? Next week, put in $2. The following week, $3. See the pattern? Save one dollar more than the previous week. It’s called “Stack Saving.” By the end of a full year, they would have $1,378 in savings just by taking incremental steps each week. And it all starts with a realistic, attainable plan.

Unlock the Amazing Benefits of a Savings Account

A savings account isn’t a nice-to-have; it is a must-have, foundational component of any financial health journey and must be contemplated during the financial planning phase. Let’s recap the benefits of a savings account:

Savings Accounts Are Insured by the FDIC

Savings accounts are unique in they are insured up to $250,000 by the FDIC, offering peace of mind that the money will be there in the rare event of bank failure.

Savings Accounts Are Low-Risk

Because savings accounts are not invested in the stock market, they are extremely low risk. When your employees deposit money into a savings account, they are essentially lending the bank money. The bank — in turn — issues loans to other customers with those funds. Your employees earn interest as a token of the financial institution’s gratitude.

Everyone Can Open a Savings Account

While some short-term savings vehicles like Money Market Accounts or Certificates of Deposit may require higher starting balances, everyone can open a savings account with virtually any amount of money.

Open Complimentary Spending and Savings Accounts

A spending account is essential for everyday money management and access to funds. Opening a complimentary savings account creates a dedicated account earmarked for a particular event, purchase or unexpected financial challenge. This point of delineation can help separate funds while strengthening healthy savings activity. Separate spending and savings accounts also makes budgeting for short-term and long-term goals easier.

Open Several Types of Savings Accounts

No matter the savings goal, there is a savings account exclusively designed for that. Open several savings accounts that support each unique financial goal. Having specific reasons to save can also encourage your employees to save more, knowing there is an end goal or reward.

Contact FinFit for Tailored Savings Solutions

Establishing savings can be daunting for many of your employees. That’s why we built our Spending and Savings Accounts to help your employees establish impactful solutions to help them manage their daily expenses while developing healthy savings habits.

Contact our team to learn how we can help your organization succeed: 1-888-928-7248 or request a demo here.

Now more than ever, it’s imperative for employers to use every tool within their arsenal to retain and engage top talent. Fortunately, there may be an often-overlooked, golden arrow within your quiver of tools: employee financial education through robust financial wellness programs. Let’s take a closer look at financial wellness programs to see if they live up to the hype.

FinFit can help your employees measure their financial health with evaluation tools and educational resources to encourage healthier, financially sound decisions that lead to financial stability. Contact FinFit today if you have questions related to your organization’s financial health – we’re here to help guide you down the path to employing a healthier workforce.

Financial Wellness…Buzz Word or Buzz Worthy?

Over the past few years, financial wellness has been on the mind of virtually every human resource professional. If it wasn’t, it is now because it has become a top focus for employees when assessing their entire compensation and benefits package. A financial wellness program is a holistic solution designed to:

• Help employees reduce money-related stress
• Alleviate financial problems
• Improve financial capability and decision-making
• Gain financial confidence
• Achieve financial security

How Should an Effective Financial Wellness Program Work?

To get started, each employee completes a brief financial wellness assessment. Based on the results, the solution should empower employees to identify their financial goals, assess the areas where assistance is needed — such as establishing emergency savings or setting up life insurance — and then provide actionable tools and resources to help them move closer to achieving financial freedom by creating a plan. After the initial phase, the financial wellness program should deliver timely, personalized, and targeted communications and insights to help employees identify the next best step on their journey. Whether it’s one-on-one financial coaching, robust seminars on retirement planning, debt reduction webinars, or other financial literacy solutions, the financial wellness program should meet your employees where they are and move them closer to achieving their financial goals.

But do these programs really deliver results? Here are a few key areas of financial wellness programs and the desired outcomes.

Stressing the Importance of Financial Wellness and Healthy Personal Finance

Let’s face it: Financial stress is a drain on your workforce. In fact, financial stress is the leading stressor in the workplace — more than all stressors combined:

• 10% – Health Concerns

• 12% – Relationship Stress

• 15% – Job Stress

• 59% – Financial Stress

As the predominant source of stress, financial stress impacts your employees in more ways than one. The best way to combat financial stress is by implementing a robust financial wellness program.

Financial Wellness Can Improve Mental Health

While financial wellness may be the employee benefits star of the decade, mental health issues have a co-starring role. And if you’re looking to improve your employees’ mental health, it makes sense to start at the greatest source of stress — their finances. According to the 2019/2020 Global Benefits Attitudes Survey, 49% of American workers suffer from depression, anxiety, or stress associated with financial matters.

More so, many adults lose sleep because of money-related issues, which can further exacerbate mental health issues. Specifically, those suffering from financial stress are 3.4 times more likely to have panic attacks and anxiety. A holistic financial wellness program is designed to target the underlying cause of financial stress by showing employees the necessary path toward a solution.

Employee Financial Education Can Improve Physical Wellbeing

While the mental and emotional hazards of financial stress have been well documented, financial stress can also take a physical toll on employees if it’s left unchecked. One study suggests employees with financial stress are 20% more likely to have painful migraines.

According to Bankrate, financial problems are the biggest cause of sleep loss, and it’s showing no signs of slowing. The study indicates 78% of U.S. adults are losing sleep daily because of concerns over retirement savings, managing student loans, credit card payments, and healthcare costs.

When you add in the desire to save for a new house or handle unexpected financial decisions, it’s easy to see how financial stress can reach dangerous levels. People with substantial financial stress were 13 times more likely to have a heart attack. Fortunately, a financial wellness program centered around employee financial education can help remedy these physical manifestations of stress.

Employee Financial Literacy Education Can Impact Your Bottom Line

While improved employee financial education offers real benefits for employees, employers share in the successes in more ways than one — making it a real win-win.

Improve Employee Retention

As all employers reel from the Great Resignation and look for innovative ways to not only retain and engage top talent but attract fresh talent as well, financial wellness should take center stage. According to research conducted on over 14,000 employees by FinFit, offering a financial wellness program resulted in an 18.8% increase in retention among salaried and hourly employees. Along the same lines, employers say offering a financial wellness program can transform the workplace:

• 76% of employers say financial wellness leads to higher levels of employee job satisfaction.

• 65% of employers say financial wellness leads to higher levels of loyalty for employees.

In the end, your commitment to improving your employees’ financial wellness could be the deciding factor in whether they leave or stay.

Bolster Employee Recruitment

According to a 2019 PWC Employee Financial Wellness Survey, 78% of employees experiencing financial stress would be attracted to a different company that demonstrates concern over their financial wellness. This means offering a financial wellness program could better position your business to recruit top talent from your top competition.

Employee Financial Education Can Drive Cost Savings

While it may be counterintuitive, offering a financial wellness program can have a direct impact on your bottom line — in the form of savings. According to the previously mentioned research by FinFit, offering an employee financial education program can lead to a $1,855 annual turnover cost savings per employee. To put this into greater perspective, it equates to almost $2 million in annual savings for every 1,000 employees. How could your organization reappropriate $2 million each year?

Drive Employee Productivity

The correlation between money woes and decreased productivity is clear: When your employees are worrying about money problems, they can’t focus on work. And this is no secret among organizational leaders: 80% of employers report financial stress has reduced their employees’ overall performance. Based on the PWC 2018 Employee Financial Wellness Survey:

• 43% of employees surveyed said finances have been a distraction while at work.

• 21% of employees surveyed said financial worries impact their productivity.

Instead of being focused on the task at hand, employees are worried about finances, leading to missing important information, errors, and miscommunications. However, a financial wellness program offers targeted solutions to help alleviate their financial concerns.

Enhance Employee Morale and Company Culture

If your employees are worried about the feasibility of retirement or how to pay the latest medical bill, they are more likely to be disengaged and irritable with coworkers and customers. And the research supports this: Salary Finance’s 2019 Employers’ Guide to Financial Wellness suggests employees with money worries are 4.3 times more likely to have beleaguered relationships with colleagues. This can lead to increased confrontations, reduced morale, and eroding company culture.

Help Reduce Employee Absenteeism

Most likely, your employees are losing focus, getting sick, and missing work because they are consumed by financial stress. And this isn’t a secret — 58% of employers view financial “illness” as a prevalent component affecting employee absenteeism. Even worse, increased absenteeism related to financial stress is rising, with stress-related absenteeism skyrocketing by more than 300%.

However, offering financial wellness and employee financial education programs are turn-key solutions designed to quell the swell. For example, employers who offer a financial wellness program experience an average of $348 reduction in operating costs per sick day.

Maximize Your Employee Benefits Package Spend ROI

We get it — you have limited dollars to spend on employee benefit plans, and employee financial education may not rank at the top of the list. However, if you’re looking to maximize your employee benefits spend and ROI, it’s time to take a second look at financial wellness and employee financial education programs. The Consumer Financial Protection Bureau suggests employers can expect a three-dollar return for every dollar spent on a financial wellness program.

Measuring the Success of Your Financial Wellness Program

Very simply, offering your employees a financial wellness program is key to unlocking their full potential. More than 8 out of 10 employers agree that financial wellness programs lead to:

• Greater employee productivity
• More loyal employees
• More satisfied employees
• More engaged employees

However, not all financial wellness programs are created equally. To get the real results you want and your employees deserve, accurate measurements are in order. Here are a few of the top measurable KPIs to gauge the success of your financial wellness program:

Financial Wellness Engagement KPIs

If your employees don’t engage with the program, it’s impossible for them to reap the benefits. As such, the following KPIs are a great starting point to measuring success.

• What percentage of your employees are enrolled in the program?
• What percentage of your employees actively engage with the program?
• How much has program use and engagement changed or grown over a specific period?
• What is your return log-in rate?
• How many pages does each user visit per visit?
• How much time are they spending on the employee financial education site?

Gauge Positive Employee Action

Measuring employee financial education engagement is important, but the true measure of success is how the program has prompted employees to change actions and behaviors. Look to measure:

• Change in retirement plan participation
• Change in retirement plan contribution rates
• Increased percentage of employees that have optimized the employer match
• Decrease in the number of 401(k) plan loans
• Increase in the utilization rate of other employee benefits
• Overall increase in employees’ retirement savings plans
• The number of employees who started emergency savings
• The percentage of employees that have changed their emergency savings rate
• The number of employees who started contributing to an HSA
• The percentage of employees who changed their HSA contribution rate

Gauge Employee Confidence & Sentiment

When it comes to your financial wellness program, it’s also about how your employees feel. Your employee financial education program should help you determine:

• How much do your employees actually like the financial wellness program and resources offered?
• Are your employees more or less confident after participating in the financial wellness program?
• Have your employees experienced a decrease in financial stress?

Reach Out to FinFit for Financial Wellness Solutions

Finding the best financial wellness and employee education program to suit your organizational needs can be a difficult task, but FinFit makes it easy. We are the oldest, largest, most comprehensive financial wellness and employee financial education provider in the United States. Since 2008, we’ve been dedicated to helping employers and employees improve their financial health and become financially stable. Today, we provide financial wellness solutions for more than 200,000 employers. However, the real impact story of our financial wellness and employee financial education lies in the lives and organizations we have helped change:

• 25%+ Improvement in Employee Retention

• 88% Increase in Employee Productivity

• 55% Reduction in 401(k) Borrowing

• 80% Decrease in Financial Savings

• 70% Increase in Monthly Savings

Ready to help your employees and transform your organization? Contact FinFit today by completing the online contact form. Or, for immediate assistance, don’t hesitate to call us now at 1-888-928-7248. In either case, an experienced Financial Pro at FinFit is waiting to help.

FinFit helps boost employee productivity and increase company morale by offering a 24/7 financial wellness program. If you’re thinking about offering a financial wellness program at your company, get in touch with us or request a demo today!

How A Financial Wellness Program Can Boost Productivity

The merging of personal and work lives continues to increase given the increasingly remote work landscape. So, while some personal issues may be unrelated to work, employees bringing their financial issues to the office can become an issue for employers. Offering a financial wellness program as a benefit for employees, including educational resources and financial solutions, can be a huge factor when it comes to recruiting and retaining employees.

Are Your Employees Ready to Meet Their Financial Goals?

Many people today associate financial planning and a current financial situation with the funds incoming. Other financial services may go ignored until a financial challenge arises. Many employees, especially the younger generations, may not think about financial planning until they get closer to retirement. Financial planning is so much more than saving for retirement. However, without knowledge, guidance and training, many employees have no idea where to begin. A financial wellness program can provide insight, direction and resources to enable employees to establish money management goals and create a plan to achieve financial independence, now and in the future.

What is a Financial Needs Analysis?

Every positive step forward starts with looking back and assessing current or past behaviors. If you don’t know where you stand in the present, it’s difficult to determine possible improvements for one’s financial security. A financial needs analysis provides employees with an objective, realistic perspective on their current status. It covers where they have weak spots that will continue to hamper their goals if not addressed. Further, the analysis can point out steps to take to make smart, positive behavioral changes.

Whether that’s for education funding, creating an emergency fund, determining the best use of credit cards or how to find a financial advisor, the analysis provides personalized guidance and recommendations unique to the individual. Every individual financial situation is unique, as is every financial needs analysis.

How a Financial Wellness Program Helps

The program starts off by personally assessing all of the participating employees and identifying common financial challenges, liabilities, planning concerns associated with personal finances, and cash flow issues. There are varied financial struggles and levels at which each employee is dealing with them, but the issues that consistently percolate to the top oftentimes have the most direct impact on overall company productivity. Through a holistic financial wellness program like FinFit, employees gain access to educational resources, financial tools and expert financial coaching that helps them make positive behavioral changes when planning for both the near-term and long-term future.

Financial planning is far more than retirement savings, investing in stocks, mutual funds and annuities from an insurance company. Planning tools can include help with IRAs, life insurance policies, emergency fund accounts, financial coaching, budgeting worksheets, children’s education expenses, risk tolerance calculators, college financial aid, retirement income needs, and debt solutions. When organizations prioritize income protection and securing the financial futures of their employees, the organization grows stronger and smarter as a group. That turns into better performance, better productivity, increased employee retention and overall improved morale for the company.

Reach Out to FinFit Today to Start a Financial Needs Analysis for Your Employees

FinFit’s FNA process has been a proven resource for employee financial training, employee retention and morale improvement. The emotional, physical, mental, and financial health of employees has a huge collective impact on the company bottom line. Financial challenges will impact the best of employees when they are worrying about how to solve personal financial problems. With FinFit, your company can put the right financial services, educational tools and expert financial products in your employees’ hands to help them get back on track with financial planning to establish a solid financial future.