2019 - Page 10 of 11 - Best Money Moves

How Can Financial Wellness Be Improved?

by LizStevens | Feb 19, 2019 | Blog

How can financial wellness be improved? Overspending and credit card debt is pulling employees further away from building savings and financial security.

Financial stress is getting worse, making financial wellness programs a critical benefit offering for employers.

74 million Americans have more credit card debt than emergency savings, according to a new survey by Bankrate. “Consumers should make hay while the sun shines. Now is the time – with unemployment low and wages rising – to right-size the equation by paying off high-cost credit card debt and adding to emergency savings. Sadly, it looks like we’re collectively moving in the wrong direction,” says Greg McBride, Chief Financial Analyst for Bankrate. “The sharp deterioration in the relationship between credit card debt and emergency savings is an ominous indicator of the financial health among American households.”

Overspending is a Barrier to Financial Wellness

A ValuePenguin survey found more than two-thirds of Americans overspend by at least $100 each month and close to 60 percent admit that they don’t (or can’t) pay off their full credit card bill each month. More than 40 percent of Americans have credit card debt over $2,000.

Americans overspend most on food, online shopping, clothing, social events, and alcohol. A separate Bankrate survey found Americans spend an average of $2,944 each year on financial vices like takeout, drinks, and lottery tickets. The typical American buys restaurant or takeout food at least two times a week and close to 40 percent dine out at least three times a week.

Late Payments Impede Financial Wellness

7 million Americans are 90 days or more behind on auto loan payments, a new record reported by the Federal Reserve Bank of New York. “The substantial and growing number of distressed borrowers suggests that not all Americans have benefitted from the strong labor market,” economists wrote in a blog post for the Federal Reserve Bank of New York.

Late payments are often associated with late fees and growing unpaid interest, making it all the more difficult for an individual to catch up once they’ve fallen behind.

How Can Financial Wellness Be Improved?

The good news is, Americans want to improve their financial wellness. Nearly 90 percent of Americans are actively trying to decrease their debt, according to ValuePenguin.

McBride recommends Americans, “come up with a realistic plan for paying off the amount owed [on high-interest credit cards] during the interest-free period.” It sounds simple enough, but the reality is almost 60 percent of Americans find tracking and budgeting expenses to be more stressful than activities like opening a new savings account or trying a new work out.

Financial wellness programs, like Best Money Moves, provide the guidance, tools, and support Americans need to reduce their financial stress.

More on Financial Wellness:

How Do Employees Pay for Unexpected Expenses?

What Tops Financial Stress for Employees?

Which Basic Need Are Your Employees Struggling to Afford?

What Percentage of Americans Spend More Than They Earn?

Reduce Financial Stress with This Type of Insurance

Financial Wellness Research Warrants Worry

Buyers Remorse: Is It a Bargain or a Bad Idea?

First Look at the Future of Financial Wellness

Reduce Financial Stress with This Type of Insurance

by LizStevens | Feb 12, 2019 | Blog

Reduce financial stress with this type of insurance. Research by Life Happens shows most Americans with life insurance experience less financial stress knowing their family is financially protected.

Americans say feeling financially secure adds the most meaning to their lives, even more than being in love or owning a home, according to recent research by Life Happens, a nonprofit organization dedicated to educating the public about important insurance planning topics like disability, long-term care, and life insurance.

Almost 80 percent of Americans agree that preparing financially for life’s unknowns is a way to show loved ones that you care and more than 60 percent of Americans think that having life insurance is the key to taking care of their family financially.

How Life Insurance Reduces Financial Stress

“Let’s look at the example of the government shutdown,” says Marv Feldman, CEO of Life Happens. “All of a sudden we’re seeing government employees who can’t afford to go to the grocery store or go to the doctor because they missed one or two paychecks. What if one person is gone forever? How do they replace that paycheck? Through life insurance. It brings to the forefront that people need to plan for these types of events when the payroll disappears.”

Reducing financial stress is a top priority for close to 80 percent of Americans. Nearly 70 percent of Americans with life insurance say they are less financially stressed. More than 60 percent of people with life insurance say they’re able to enjoy life more knowing their loved ones are financially protected with life insurance.

How Employer-Sponsored Life Insurance Can Reduce Financial Stress

“One of the things we saw after the recession in 2008 was many companies were so financially stressed that they started cutting their benefits. Some companies even eliminated group term life insurance. For those same employees to go out into the marketplace and replace those benefits is much more expensive than what they could get from an employer’s plan,” says Feldman. “It’s really important for individuals to work with HR departments and maximize their benefits, and determine how they can enhance what they replaced or lost.”

Employers who offer life insurance know their employees are getting coverage at a lower cost than if they were to seek coverage on their own. Money that would have been spent on life insurance can then go towards paying down debt or saving for emergencies or retirement, lessening their overall financial stress.

How Employers Can Communicate Value of Life Insurance

“Employers, in general, do a very poor job of communicating the value of the benefits employees receive from the company that they don’t pay for,” says Feldman. He says it’s important to communicate that cost comparison so employees know what they’re getting. “An example would be if you go to a Hyatt or a Marriott and used to get free parking, now it could cost up to $50 per day. A lot of employers pay for parking which adds up to a significant benefit.”

Total compensation statements are annual statements that list an employee’s compensation as well as their benefits and those employer costs. It might make sense to include with benefits offerings a market cost comparison of organizational costs versus individual costs to underscore how much an employee can save by participating in a group plan.

Hiring Employees with Criminal Backgrounds: What You Need to Know

by LizStevens | Feb 6, 2019 | Blog

Hiring employees with criminal backgrounds: what you need to know. More than 650,000 people are released from prison each year and companies are committing to changing recruiting practices to include opportunities for those with criminal backgrounds.

The Society for Human Resource Management (SHRM) recently launched Getting Talent Back to Work, a national pledge for business leaders to commit to giving opportunities to qualified people with criminal backgrounds. It follows January’s passing of the First Step Act, which improves rehabilitation and re-entry opportunities for the more than 650,000 people released from prison each year.

“This is a group we, as business leaders, cannot afford to overlook as 1 in 3 adults in the United States currently has a criminal background,” said Johnny C. Taylor Jr., CEO of SHRM. “Not only is it the right thing to do—to give a deserving person a second chance—but it is becoming imperative as businesses continue to experience recruiting difficulty at an alarming rate.”

More than 80 percent of hiring managers indicated workers with a criminal background are a high-quality hire equal to or even more effective than those without a criminal history, according to research by SHRM and the Charles Koch Institute. More than 70 percent of those same hiring managers found extreme value hiring those with a criminal background because of diminished costs associated with hiring from within that population, as well as mitigating risk to effective operations.

Hiring managers are able to see beyond the organizational benefits of hiring people with a criminal background and point out larger societal benefits, like the opportunity to improve the community around them and the intrinsic value of giving people second chances at employment.

Associations and companies representing more than 60 percent of the U.S. workforce have already joined SHRM in taking the Getting Talent Back to Work pledge. Competition for talent is tight and employers can’t afford to overlook a third of the population because they have criminal backgrounds. A strong recruiting process will ensure only the most qualified candidates from a truly diverse pool, regardless of background, are considered for open positions.

“Our nation just took a major first step toward helping people who want an opportunity to transform their lives—now we’re pledging to take the next step,” said Mark Holden, senior vice president and general counsel of Koch Industries. “Koch is incredibly proud to offer second chances to qualified people with a criminal record and now, thanks to SHRM, more businesses will have the tools needed to hire these individuals. By taking this next step, we can create stronger families, a more robust workforce, and safer communities for all.”

Is Rehiring a Former Employee a Good Idea?

by LizStevens | Jan 23, 2019 | Blog

Is Rehiring a Former Employee a Good Idea? They’re familiar with organizational operations, company culture and need less training to get up to speed, but only half of employees would consider returning to a former employer.

Most senior managers are open to rehiring boomerang employees—staff members who previously left the company on good terms, according to recent research from Accountemps.

“Companies need to leave no stone unturned in their search for talent,” said Michael Steinitz, executive director of Accountempts. “Boomerang employees are an attractive option because the firm is already familiar with how they’ll perform and fit in with the organizational culture. Returning workers also require less training to get up to speed and may have acquired valuable new skills while they were gone.”

Former employees, however, were not quite as eager for a reunion—just over half of them are likely to apply for a position at a previous company.

More than 20 percent of employees would not return to a former employer because of dissatisfaction with management. Issues with management arise when there is frequent miscommunication, limited flexibility with scheduling, or when workloads are unbalanced. Dissatisfaction with management lessens job satisfaction and can lead to employee burnout.

A poor fit with the organizational culture was the reason over 15 percent of employees would not apply for a position at a previous company. Most employees agree that company culture is important. If companies can get employees invested in the work environment and company mission they’ll be more likely to return or recommend quality candidates.

Nearly 15 percent of employees wouldn’t return to a prior employer because of unfulfilling job duties. It’s impossible to make every position feel interesting and important, but if employers can connect the work to the larger company mission, provide great benefits and maintain a positive company culture, unfulfilling work is less likely to affect job satisfaction.

Just over 10 percent of employees refuse to return to a former employer because of bridges burned by the company. There’s no way to unburn a bridge, but employers can expect that management treat everyone with respect, even when an employee has made the decision to part ways.

“Rehiring a former staff member may seem like a simple process, but it’s essential to understand why the person originally left and whether the issue has been resolved,” advised Steinitz. “The employee will not stay long if past problems keep resurfacing.”

More than 60 percent of HR professionals called the sourcing of talent “very or extremely challenging” in a recent XpertHR survey. Rehiring former employees doesn’t exactly widen the candidate pool, but it does add in a few individuals who have already demonstrated their value. It might be worthwhile to start leaving the door open when talented, reliable employees move on.

How Do Employees Pay for Unexpected Expenses?

by LizStevens | Jan 21, 2019 | Blog

How do employees pay for unexpected expenses? Less than half use their savings and the rest turn to credit cards, personal loans, or borrow from friends and family, increasing debt and worsening financial stress.

More than a third of U.S. employees faced an unexpected expense, like a car repair or emergency room visit, that cost $5,000 or more last year, according to a recent survey by Bankrate.

Americans are already losing sleep and spending time at work worrying about their finances (costing employers up to $2,000 annually per employee lost in productivity). If only 40 percent of workers have enough savings to cover an unexpected $1,000 expense, even less have enough to cover a $5,000 expense.

Credit Cards and Personal Loans

Without savings to turn to, 15 percent of employees finance emergency expenses with credit cards they pay off over time. It seems like a solution that’s easy enough, but interest on unpaid balances adds up quickly. In 2018, Americans paid banks $104 billion in credit card interest and fees, according to Magnify Money by LendingTree.

The 6 percent of workers who cover an unexpected expense by taking out a personal loan run the same risk of snowballing into deeper debt if they’re unable to pay off the balance before interest hits.

Budgeting and Spending

Another 14 percent of Americans reduce spending on other things to cover an emergency expense. It might prove to be harder than they anticipated. Marcus by Goldman Sachs found almost 60 percent of Americans found tracking and budgeting expenses to be more stressful than opening a new savings account or trying a new workout.

Friends and Family

Borrowing from family or friends is how 13 percent of Americans deal with an unexpected expense. Most Americans are struggling with their own financial stress, but more than 80 percent are willing to make a major financial sacrifice for adult children, according to research from Merrill Lynch. Each year, parents spend twice as much supporting their children than they do making contributions to their own retirement ($500 billion spent on adult children, $250 billion in contributions to retirement accounts).

Unsure How to Cover Unexpected Expenses

An alarming 10 percent of Americans would either figure out “something else” or don’t know what they would do if they had to deal with an unexpected expense. Almost 80 percent of employees live paycheck to paycheck. More than half of the 3 in 4 workers that say they are in debt today think they will always be in debt.

Unexpected expenses add to the high level of financial stress most employees already experience. It’s overwhelmingly clear that employees need employer support to build emergency savings and prepare for life events like homeownership, raising a family and retirement. Employers who offer financial wellness programs and encourage employees to engage with them can help employees get back on track, so an unexpected expense doesn’t sink them further into debt.