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Helping U.S. Servicemembers Fight Financial Stress

by Emily Pfund | Feb 1, 2017 | Blog

In this week’s Best Money Moves roundup, we take a look at news stories and new research studies that may impact employee benefits and HR issues. We hope you find this news roundup helpful, and we’d love your feedback.

Our men and women in uniform fight for us overseas, but they too often come home to face another fight: the fight for their own financial security.

Long stints overseas keep servicemembers from dealing with financial issues like mortgages or loans at home and increase childcare costs by removing one caretaker from the home. The military also require frequent moves as servicemembers are re-assigned to military bases across the country or across the world.

That’s why the Consumer Financial Protection Bureau (CFPB) created the Office of Servicemember Affairs: to help members of our military handle the financial stresses they face and to protect them from unscrupulous financial practices designed to prey on their unique financial situation.

Learn how this added financial stress impacts our men and women in uniform.

Employees should have received their W-2s and other tax documents by Tuesday. It’s also National Tax Identity Theft Awareness Week. Here’s what your employees should know to protect themselves.

Do you ask potential employees how much money they earned at their last job? That question is now illegal in the city of Philadelphia, thanks to a new law aimed at ending the gender pay gap. Some say the measure could backfire.

Employees from different generations have different workplace needs. What was appealing to Baby Boomers may not work for Generation X or Millennials. Here’s how you can communicate across generational lines.

Worried about what your business should do if the Affordable Care act is repealed? For now, you’re best off staying the course and continuing to follow the ACA’s rules. Here’s why.

A negative workplace culture can make even the most dedicated employee hand in their two weeks’ notice. These eight mistakes are some of the most common ways companies ruin their office culture. Have you seen these in your office?

Dissatisfied employees can drag down everyone around them and hurt a business’s productivity. A mobile-based employee feedback app can help managers intervene before the situation becomes serious.

Replacing retail employees can cost a business an average of $3,400 per employee. If you have a turnover rate near the national average of 5 percent, those costs can really hurt your bottom line. These six things can help you hold on to those employees.

Can wellness programs actually help significantly lower employee stress? According to one three-year study, the answer is yes. See how much employees were able to reduce their stress.

Small businesses can’t always offer retirement plans as extensive as those offered by big corporations, but that doesn’t mean they’re not good plans. Learn how to get the most out of small business retirement plans.

Have something to add? Email info@bestmoneymoves.com.

It’s hard to stay on top of everything in the news. That’s why each week our Best Money Moves newsroom will bring you the most important news in financial wellness, employee benefits and financial stress. We hope you like the information and, if you do, please spread the word. For midweek developments, follow us on Twitter and on Facebook.

Protecting Servicemembers’ Financial Security While They Protect Us

by Emily Pfund | Feb 1, 2017 | Blog

Serving in the military demands a multitude of sacrifices on behalf of one’s country. Servicemembers give up time with their families and friends and have to miss birthdays, holidays and other important events many of us take for granted, not to mention the risk of the ultimate sacrifice: injury or death.

On top of all the sacrifices our servicemembers make, they shouldn’t have to sacrifice financial security as well – but in fact, they often do.

Long deployments can prevent servicemembers from dealing with financial issues like mortgages or loans at home and increase childcare costs by removing one caretaker from the home. The military also require frequent moves as servicemembers are re-assigned to military bases across the country or across the world.

We know that financial stress can reduce job performance; a study released last year by Northwestern Mutual found that 41 percent of employees say financial stress is hurting their careers. This is especially dangerous for our country’s men and women in uniform, whose jobs can put them in dangerous situations where focus on the job is essential to their safety and the safety of their colleagues. In some cases, servicemembers’ financial stress can lead them to lose their security clearances.

On top of the normal financial stresses we all face, a 2006 Department of Defense report found that “predatory lending undermines military readiness, harms the morale of troops and their families, and adds to the cost of fielding an all volunteer fighting force.”

The Consumer Financial Protection Bureau (CFPB) established the Office of Servicemember Affairs to look out for military members and protect them from unscrupulous financial practices targeted to their unique situations.

Under CFPB Assistant Director Holly Petraeus, who led the office from its founding in 2011 until January 2017, the office has provided financial education and advice to military members and veterans and fought against improper debt collection practices, mistreatment of student loan borrowers and more.

In one such case, the office found that a lender specializing in loans to servicemembers threatened to harm borrowers’ careers or tell borrowers’ commanding officers that they were struggling to pay their debts.

Among the office’s victories are:

Strengthening the Military Lending Act to add more financial products to the types of loans covered, helping protect servicemembers’ credit.

A $60 million settlement with student loan servicers for running a “years-long scam” to overcharge military families on their student loans. The settlement included refunds to 78,000 servicemembers

A $28.5 million settlement with Navy Federal Credit Union for improper debt collection actions and freezing customers out of their own accounts.

The Office of Servicemember Affairs also provides veterans and members of the armed forces the opportunity to submit complaints if they feel they’ve been targeted by unfair practices and offers resources to help them answer some of the frequent questions they may face.

Our servicemembers already make sacrifices to protect the United States. Their financial security shouldn’t be on that list.

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.