Ilyce Glink, Author at Best Money Moves

3 Money Moves that Might Haunt You and How to Avoid Them

by Ilyce Glink | Oct 26, 2016 | Blog

Not every money move is a good one, but some can come back to really haunt you.

Consider these potentially scary money moves: Borrowing money for your children’s education; helping a friend by co-signing a lease or mortgage; and, opening an account to get an attractive benefit. These money moves could be a force for good or, if they go awry, they could haunt you for years.

The good news is that with some preparation and research your employees can avoid these financial nightmares and the financial stress that comes along with them.

Here are three financial decisions that could come back to haunt your employees along with some ways they can limit the damage.

1. Accepting loan terms without crunching the numbers first

Student loans are one of the biggest financial burdens for employees. Millennials are overrun with debt but their parents have, in many cases, co-signed for those loans and often have separate loans as well.

Much of the problem comes from borrowers being unprepared to pay these loans back out of the income they’re able to earn after graduation. It’s easy for borrowers to accept student loans without thinking twice – especially when it seems like everyone else is doing the same – but without some planning and forethought, these loans can wreak havoc on your employees’ finances for years, limiting their opportunities for buying a home and saving for retirement. That’s why it’s so important to crunch the numbers before signing your name to the loan documents.

While we started off by talking about student loans, this logic applies to car loans and mortgages, too. Before accepting the terms (and the money), encourage your employees to estimate their future monthly payments and make sure it’s an amount they can comfortably afford.

Otherwise, they’ll end up having to make hard decisions years down the line, like moving back home to afford their student loan payments or having to sell and downsize to a more affordable house. It seems simple, but taking a few minutes to run the numbers can help your employees avoid committing themselves to a future they can’t afford.

2. Co-signing without understanding the pitfalls

When you co-sign a loan, it’s often to help a child, relative or friend obtain something they couldn’t get on their own, like a loan or a lease. It’s a kind, helpful gesture, but also a risky one because it makes the co-signer legally responsible for the payments – the whole payment, should the person who signed the loan default.

Your employees might think they’re only being nice by co-signing a loan for a family member or friend, but make no mistake: if the original signer defaults or even stops making payments temporarily, the co-signer will be left footing the bill.

That could mean they’re stuck paying for two homes, two cars or an education they didn’t receive. It may also affect their credit history (which will now be tied to the credit of the co-signer, and may get dinged when payments are missed) and their ability to qualify for future loans.

You and your employees don’t have to refuse every request to co-sign (many parents help their adult children this way), but they need to take the responsibility seriously and understand the ramifications. Co-signing can evoke strong emotions, but it’s OK to voice concerns if the situation doesn’t make sense. Talking through the options could lead to a solution where your workers aren’t putting their finances at such a huge risk.

3. Opening accounts on the spot

Retailers often ask customers to sign up for store-branded cards at checkout, promising a moderate one-time discount or no interest for six months. Airline-branded credit cards often do the same in airports offering large sign-up bonuses and sometimes the deals seem too good to pass up. Unfortunately, these offers almost always have a downside.

The cardholder might have to spend a certain amount – much more than they normally would – in the first few months to actually receive the points or, if the card promises no interest, they could be charged interest retroactively for not paying off their entire balance by the end of the introductory period.

Suddenly the lure of a free flight has gotten your employees deep in debt and stressed over paying their monthly bills, when a quick read of the fine print would have shown them the important deadlines and details they needed to know.

If your employees routinely open new accounts without checking the fine print, they could also put themselves at risk of having their personal information stolen. The more companies that have this data, the higher the risk of it being exposed. And when your employees get in the habit of freely giving out details like their social security number, it could simply be a matter of time before that decision comes back to haunt them.

As we’ve learned, regularly reminding your employees to make smart money decisions does make a difference, so take action to help them avoid these terrifying fates.

For more information about Best Money Moves, email info@bestmoneymoves.com.

Having a Hard Time Saving Money? So is Everyone Else

by Ilyce Glink | Oct 19, 2016 | Blog

Are you having a hard time saving money? Well, saving money doesn’t come easily for anyone, whether it’s a retirement account or an emergency fund. But it turns out most people are struggling with it as much – or more – than you.

A recent survey from GoBankingRates found that making more money doesn’t mean you necessarily have more money stashed away. And that’s true even if you earn nearly $100,000. This is a big problem, since having some savings can protect your overall personal finances from unexpected (and unpleasant) surprises.

Here are some of the reasons employees at all income levels face issues putting money away, and how employers can help them correct their habits.

A universal problem putting money away

According to the survey, more than 70 percent of Americans making less than $25,000 a year have less than $1,000 in savings. The numbers are nearly identical for employees earning $50,000 – or even $75,000 – annually. Clearly, the problem isn’t just the amount of take home pay.

It can be confusing for employees in a lower income bracket to think those making double or triple their salary could still be living paycheck-to-paycheck. Many people likely think a decent raise in pay would solve all of their money problems, but it seems that for a majority of employees as their pay goes up, so does their spending.

Stress caused by a lack of savings

Without adequate savings, your employees are at the mercy of any unexpected expenses or changes to their budget. An injury, car problem or home repair could throw their finances out of whack and put them at risk of missing other bills and monthly payments or racking up debt to cover these costs.

Counting on the next paycheck to get by means there’s never a chance to build up a safety net and there are several factors creating this problem.

When an employee’s spending rises along with their salary, they experience ‘lifestyle inflation’ and in some ways it’s understandable. A promotion or raise typically means a change in stature, so your employees might feel social pressure to upgrade their lifestyle along with their income. Or, employees could be facing a barrage of monthly expenses – including student debt along with rent and utilities – that eats up nearly as much of their now slightly bigger (after taxes are taken out) check.

No matter what the temporary financial stress, the underlying problem is often a lack of financial education. It doesn’t matter how much your workers earn; if they can’t manage their money well enough to get ahead of the ball, they’ll still feel financial stress.

Setting themselves up for lifelong financial stress

For some employees, this creates a daily problem of financial stress, but the bigger issue is that it’s setting them up for a lifetime of anxiety. Employees who can’t or don’t save will face difficult choices today for sure, but also even more complicated decisions as they near retirement – a second survey by GoBankingRates showed more than half of Americans have less than $10,000 saved for retirement. These workers may have to delay retirement, drastically alter their retirement plans or seek assistance from family, consequently hurting their relatives’ savings goals.

Financial stress forces your workers to think very short-term: making it until the next paycheck or covering the next set of monthly bills. But the less action they take to fix these problems now, the more they end up hurting their future selves.

For more information about Best Money Moves, email info@bestmoneymoves.com.

How to Help Prevent – and Recover From – Identity Theft

by Ilyce Glink | Oct 12, 2016 | Blog

Financial stress in the workplace often comes directly from worries about the unexpected: job loss, surprise expenses or injuries. Identity theft and fraud are becoming an increasingly common source of financial worry for employees.

According to a recent survey from Bankrate, 41 million adults in the US have been a victim of identity theft and 49 million more know someone who has been victimized. This crime is sometimes unavoidable and recovering from it takes a serious toll, both emotionally and financially.

Here are some of the ways identity theft causes stress for employees and some steps employers can take to help educate their workers.

Financial stress from identity theft

The number of ways identity theft and fraud can happen are startling – from a parent running up debts in a child’s name to a stranger abusing personal information from a data breach – and once an employee is victimized, the financial stress sets in.

A recent survey reported by HSB showed that more than a third of Americans had been the victim of a cybercrime in the past year, including the hacking of their personal information and their data being held for ransom. In nearly a quarter of these incidents, the victim spent up to $5,000 of their own money repairing the damage, while more than half spent up to $500. In fact, $15 billion was stolen through identity fraud last year in the US alone. This sudden major expense causes extreme financial stress for victims, in addition to the emotional anxiety of having their information abused.

A long recovery means drawn-out stress

This stress is often prolonged, as victims of identity theft face a difficult path to recovery that doesn’t happen overnight. If an employee of yours had their identity stolen, they might have their checking account emptied, debt transferred onto a credit card in their name or a mortgage opened using their credit. Their recovery process could include getting a police report, filing an identity theft report, ordering their credit reports and requesting fraud alerts or security freezes, even dealing with debt collectors and loan servicers looking to collect payments for fraudulent accounts, all while having to keep a careful eye on every one of their financial accounts for the foreseeable future.

It can take years for a victim to restore their credit and finances, often without any sort of explanation for how they became a victim. The Bureau of Justice Statistics’ most recent report claimed 68 percent of identity theft victims had no idea how the perpetrator got ahold of their personal information, leaving them still feeling vulnerable. If your workers are dealing with this kind of stress, whether it’s an ongoing abuse of their identity or paying thousands of dollars to restore the damage caused by fraud, the anxiety doesn’t go away once they arrive at work.

Steps for employers to take

Your employees would certainly appreciate your understanding if they’re facing these issues, but they can also use your help. Workers of all ages can be victims and the less familiar they are with digital security, the more at risk they’ll be. Educate your employees about good digital habits – like using strong, unique passwords for every account and reviewing accounts on a regular basis for fraud – that can be applied to both the workplace and their personal lives. We’ve already seen that regular reminders can help change your workers’ habits, so encourage them to change passwords frequently and stay on top of their financial accounts.

You can also talk about risks like computer viruses, phishing attacks and ransomware, all of which can be used to steal data in or out of the workplace. Prevention is a major part of protection against identity theft and the more your workers know, the more prepared they’ll be to react appropriately and manage the financial stress that accompanies this crime.

Your workers can’t make the right decisions if they don’t have the knowledge they need both before and after their identity has been abused. When financial stress hits, having a guide is helpful, which is why providing the right resources is one of your best options to assist them.

Student Loans Are Coming Due. Are You Ready?

by Ilyce Glink | Oct 5, 2016 | Blog

It’s the start of fall, a few weeks until Halloween, and another significant milestone as well; student loans are coming due for May 2016 graduates.

Federal student loans typically have a six-month grace period after graduation to allow borrowers an opportunity to find work, accrue some savings and prepare to start making payments.

Although this grace period sounds like a relaxing break, it can be a financially stressful time as recent graduates might be thinking about how their new monthly student loan bills will impact their monthly expenses. Studies have shown that Millennials are already more financially stressed than other working generations, so this upcoming shift could make things even worse.

Here are some of the ways student loans can impact the financial stress levels of your employees, and what you can do to help them manage this transition.

Student loan stress

Americans owe more in student loans than ever before. The average spring 2016 graduate has nearly $40,000 in student debt and many of these grads will be facing their first bill in a matter of weeks. The six month grace period is an opportunity to prepare for the higher bills that are now due each month, but for financially inexperienced recent grads it’s still difficult to anticipate these monthly payments – often hundreds of dollars – and then factor them into their budgets. The result is a shock to their system, and stress comes with it.

The more money you owe, the more financial stress you’ll feel. A 2015 study from the University of South Carolina found that the more debt a student loan borrower carries, the more likely they are to be depressed.

In the workforce, if you tend to hire younger workers, your employees are likely already paying down their student loans – 43 million Americans are – and the amount they owe could vary wildly. Even if it’s not their first payment they’re reacting to, struggling to cover them each month take its toll, especially when it’s not the only thing giving them anxiety.

Millennials are already stressed out

The American Psychological Association’s annual ”Stress in America” survey found that Millennials, including recent college graduates and young employees, have the highest self-reported stress levels of any generation in America. Student loans have a lot to do with this, as many of these young employees are handling things like a budget, an apartment lease and a full-time job for the first time on top of their loans.

To make things worse, the student loan payment process isn’t always as easy as it should be. Even if a borrower wants to make their payments on time and in full, the CFPB notes that plenty of obstacles can get in their way, like a lack of answers from their loan servicer about whether they qualify for more manageable payment plans. In some instances, loan servicers can intentionally apply borrowers’ payments in a way that causes them to pay more interest or fees in the long run, rather than helping them pay off their loans as quickly as possible. These issues, combined with debt inexperience and ignorance (in some cases), means you’ll be dealing with financially stressed employees in your workplace.

How employers can help

If your workers are showing signs of severe financial stress or depression, whether they’re less focused or productive, they’re missing work frequently due to anxiety-related illnesses or they’re worried about managing their money in the face of student loan payments, you can help. When it comes to financial knowledge, a little bit can make a huge difference.

Unfortunately, student loan burdens are common for employees today, but financial literacy isn’t. The more you can help educate your workers about setting a proper budget, maximizing their emergency savings and efficiently paying off their debt, the less stress they’ll feel about their finances. The result is more productive employees who are focused on accomplishing their money goals instead of worrying about their money fears.

Feeling Sick? Financial Stress Isn’t Just About Numbers

by Ilyce Glink | Sep 28, 2016 | Blog

Are you feeling sick? Do you find yourself just sniffling away, coughing and sneezing? Unable to shake what should be a two-day head cold? The problem might not be germs, but what’s in your wallet.

There are plenty of money-centric benefits to lowering your financial stress, from increased savings to cutting out monthly debt payments, but we don’t often talk about the health benefits that go along with them.

Imagine if your heart didn’t race when you opened up your bills each month or got sick to your stomach thinking about your next mortgage payment.

While it’s easy to write these worries off as purely mental or emotional problems, they can cause serious physical problems over time. The latest research ties your health to your level of financial stress: Lower your level of financial stress, feel better.

Here are some of the major physical benefits researchers have linked to lower financial stress levels and how you can help your workers (not to mention you and your family) achieve them.

Feeling the symptoms

According to the Mayo Clinic, stress manifests itself in all sorts of ways: anxiety, heart disease, depression, headaches and problems with memory and concentration are all common symptoms. These can come from any kind of stress, but with so many Americans reporting elevated levels of financial stress, there’s a good chance your employees have felt sick and experienced these health issues because of their finances.

According to the American Psychological Association’s annual ‘Stress in America’ survey, ‘Money’ and ‘Work’ are the top causes of significant stress for adults-67 and 65 percent-and they’re seeing the effects on their health. More adults reported their health as being ‘fair’ or ‘poor’ in the past year than ever, 23 percent of adults, and there were increases in physical symptoms of stress and poor health as well, including chronic illnesses, high blood pressure, poor sleep, overeating habits and mental health concerns.

According to the survey, nearly one-third of adults claim that their stress has a strong or very strong impact on their physical and mental health, so when your employees face these symptoms they could have problems focusing, feel depressed or even face heart disease in part due to their inability to properly manage their finances.

So, imagine what happens when they lower their level of financial stress – whether by creating a budget that works for them or paying off a longstanding credit card debt – these physical symptoms might start to go away.

If you’re wondering whether you should offer help, consider this: If the choice is between seeing your employees healthy-both physically and financially-or hurting in these ways, the decision is simple.

Changing the system

Too often, we experience the physical symptoms of stress and think the only solution is to breathe deeply and find time to calm down. While dealing with stress in the moment is a good thing (and research shows daily meditation helps, “even a few minutes” according to the Mayo Clinic), it doesn’t solve the real issue: the underlying financial worries causing the stress.

We think financial stress is solvable and you don’t have to be a rocket scientist to do it. Maintaining a positive attitude while solving financial problems is tougher, and we’re sure your employees are doing what they can to keep focused and productive.

But that’s pretty tough, especially if you’re wondering whether you’ll have enough money to pay both the rent and the babysitter at the end of the month. So, without taking action to ease or eliminate their financial problems, the stress will keep coming back and cause more health harm in the long run.

As an employer, financial anxiety distracts your team, decreases retention and increases unexplained absences and health costs. If reducing financial stress also positively impacts these metrics, it’s well worth the time to figure out this piece of the puzzle.

Best Money Moves – helps reduce poor health outcomes caused by financial stress

If your employees are less financially stressed, they’ll experience fewer stress-related physical issues. This means your employees are more likely to be focused, productive and healthy overall, which translates to a more positive work environment. It also means they’ll have lower healthcare costs.

As an employer, you can help by encouraging your employees to not only find ways to manage their stress throughout the day but to eliminate it entirely. Best Money Moves is designed to guide your employees in targeting the areas which cause them the most stress and work to solve them.

You can also help in other ways. Encourage your workers to take advantage of their vacation days or lead by example. Keep an eye on how your own stress manifests itself and show empathy when your employees display similar signs. The more tools they have-and the more support they feel-the better chance your workers will have at lowering their financial stress and enjoying better physical health.