Everyone knows that saving money should be a priority. Sounds easy enough, right?
The reality for many Americans who don’t have $400 saved to cover an emergency expense: it’s harder to do in practice. Saving money falls into the same conceptual buckets as eating healthy and exercising. They are simple concepts, but if you don’t have the knowledge, tools and resources, getting started can not only be daunting, it can be paralyzing.
Imagine you have never exercised a day in your life and you finally decide that today is the day. You set a goal to lose 20 pounds. Where do you start? Do you join a gym? Do you buy equipment to work out at home? Do you focus on cardio? How about weights? How long do you exercise for? How many days a week? The questions build until your goal seems unattainable. Not because of the goal, but because the path to get started is unclear and overwhelming.
Now apply this theory to finances and saving money. Individuals that have bills to pay and mouths to feed are focused on their daily needs; it’s not that they don’t want to save, but they have to deal with the NOW. Until they take care of their current needs, it is unlikely that these workers will be able to focus on saving money or building an emergency fund to fall back on when an unplanned expense arises. They are living paycheck to paycheck like 78% of America. They feel like they don’t have a dime to spare. They want to save and just don’t know where to start. They need a plan.
The key to 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 bank 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.
Of course, Stack Saving is just one of many examples of a savings behavioral change. There are numerous strategies that can be leveraged to help employees start to save more money. The most effective programs are those that are automated and do not require the employee to take repeated, manual actions. The best employee savings initiatives incorporate practices like round-up and rewards options that automatically deposit money right into the employee’s account to accelerate their savings.
As an employer, you’re already helping your employees save if you offer a retirement plan, provide group health insurance, contribute to their health insurance premiums, offer an FSA, HSA, or HRA, or contribute to student loan payments. Any support you can provide for your employees, especially now, is invaluable to them and will in turn help you keep your best employees. The key to helping them achieve ultimate financial success is to offer a holistic suite of financial wellness services that supports the four key pillars of financial wellness: Spend, Save, Borrow and Plan. Saving is one element.
These four pillars defined by the Financial Health Network support holistic financial well-being, and it’s critical to select a financial wellness program that supports your employees in all four areas. Offering benefits or single-point solutions that focus only on one of the pillars can add value, but they aren’t effective at driving real behavioral change. Give your employees the tools and resources to establish their personalized financial roadmap and set them up for future success.