There’s no question that financial wellness is top of mind for both employers and employees. Inflation, recession threats, and the lingering effects of the pandemic continue to put a strain on workers and businesses alike. In fact, according to isolved, 68% of HR leaders report that most of their employees are living paycheck to paycheck.
However, employees with lower salaries aren’t the only ones experiencing financial stress. PwC’s 2023 annual employee financial wellness survey found that 60% of all workers are stressed about their finances. But even among those earning $100,000 or more per year, nearly half (47%) said they’re stressed about their finances.
While it’s important for employers to provide adequate compensation for their team members, companies can also support their people by offering financial wellness benefits. For example, it’s common for employers to offer retirement benefits, life and disability insurance, Health Savings Accounts (HSAs), or financial planning assistance and education.
However, today’s employees are looking for more than just the basics. And while adding additional benefits certainly comes with a cost, leaders should remember that offering a best-in-class benefits package will not only help your workforce improve their financial well-being, but it will also boost their productivity and engagement.
For example, PwC found that 1 out of 3 employees say that money worries have negatively impacted their productivity at work. Among financially stressed employees, 56% are spending three hours or more per week at work dealing with or thinking about issues related to their finances.
Financially stressed workers are also less engaged than their non-stressed counterparts, reporting lower levels of belonging, pride in their organization, and intent to recommend their company. What’s more, 73% say they would be attracted to another employer that cares more about their financial well-being.
For leaders, these findings should be a call to action. With productivity, engagement, and retention at stake, companies would be wise to provide more financial support for their team members. Fortunately, there are a variety of new financial perks available now, which allows businesses to tailor their benefits package based on budget and employee preferences.
In today’s article, I’ll describe 8 unique benefits companies can offer to support their workers’ financial well-being. Let’s take a look.
#1 - On-Demand Pay
On-demand pay, or earned wage access, is the ability to pay employees after their work is complete. This removes the need to wait for the traditional payroll cycle, giving employees access to their pay when they need it — often with zero business disruption through pay cards and digital wallets.
Providing this benefit helps workers avoid costly overdraft, check-cashing and paycheck-advance fees. According to isolved, 62% of HR leaders say they offer on-demand or earned wage access, and another 28% are considering it. This makes this benefit one of the fastest-growing financial perks, and certainly worth considering.
#2 - Family-Related Financial Assistance
Beyond providing maternal and paternal leave, companies can support employees’ family needs in other ways. For example, employers can help caregivers by allowing workers to set aside a pre-taxed amount to be reimbursed for childcare and eldercare costs. Platforms such as isolved Benefit Services can make this process simple for your workforce.
Other unique family-related benefits include fertility assistance (e.g., coverage for fertility treatments or egg-freezing), and adoption assistance. Companies like Amazon, PwC, American Express, and many others will pay attorney fees, court costs, and travel costs for qualified adoptions.
#3 - Commuter Support
A growing number of organizations — especially those in urban areas — offer a benefits program to help cover commuting costs with pre-tax income. And with many companies transitioning back to the office (and away from hybrid / remote work models), this benefit could become a highly sought-out perk.
As of 2023, employees can allocate up to $300 per month of their pre-tax earnings towards commuter benefits and another $300 per month towards parking costs. Companies, meanwhile, can save 7.65% on payroll taxes and an average of $40 per month for each participating employee. That means a company with 50 employees can save over $24,000 annually.
#4 - Educational Assistance
It’s not uncommon for employers to provide some sort of educational assistance (e.g., tuition support for a certification or degree). However, some companies are taking this a step further by covering degree programs that aren’t related to employees’ line of work, or offering these benefits to employees who have only been with the company for a short period of time.
For example, Amazon funds full college tuition, as well as high school diplomas, GEDs, and English as a Second Language (ESL) proficiency certifications — including for employees who have been at the company for as little as three months. The company also allows workers to use these benefits in pursuit of any line of work they choose.
#5 - College Funds
In addition to supporting employees’ own education, companies can also help staff with their children’s tuition through employer-sponsored 529 plans. These are tax-advantaged education savings accounts — similar to Health Savings Accounts — offered to employees through their workplace benefits program.
Companies can choose to only offer employees the option of contributing to a 529 plan via payroll deductions, or they can also provide a matching contribution. However, it’s worth noting that the “free money” from employer contributions substantially increases the perceived value of this benefit.
#6 - Student Loan Repayment Assistance
Student loan repayment is one of the biggest financial stressors for today’s workers. The average U.S. household with student debt owes over $58,000. Fortunately, a wide range of companies recognize how challenging this situation is for their team members, and are now offering student loan repayment assistance.
With the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), a temporary tax-free provision was provided for employer student loan assistance programs. Employer contributions up to $5,250 annually are income tax-free for the employee and payroll tax-free for the employer. However, these tax changes are only set to remain in effect until the end of 2025.
#7 - Emergency Savings Funds
According to the Consumer Financial Protection Bureau, nearly a quarter (24%) of consumers have no savings set aside for emergencies, and 39% have less than one month of income saved. Many of these workers are racking up credit card balances to get by, and some have even been forced to withdraw from their retirement accounts.
To give workers a boost, a growing number of companies — including Delta Airlines and Starbucks — are offering emergency savings funds, where money is automatically deducted from employees’ paychecks and deposited into an account. Most companies who offer these programs either match employee contributions or contribute some amount to these funds.
#8 - Home Buying Assistance
According to Pew Research, 49% of Americans say the availability of affordable housing in their local community is a major problem. Workers are also struggling with high interest rates that were put in place to bring inflation under control. That’s why beyond offering education or advice about homebuying, some employers are contributing financially.
Companies may lend employees money for a down payment or closing costs, work with a lender to get lower interest rates for their workers, or match employee contributions to a savings account designated for a down payment. Walmart, for example, offers mortgage assistance programs for qualifying associates that include reduced closing costs.
Supporting people’s financial well-being is good for your employees and your business
Today’s employees have a lot to think about financially — paying for college, covering commuting and caregiving costs, having enough emergency savings on-hand, buying a house, and much more. It should come as no surprise that most workers are stressed about their financial situation, even those with higher salaries.
However, employers could be doing much more to turn this situation around for their people, especially since financial stress is proving to be an immense distraction in the workplace. Companies who acknowledge their role in supporting people’s financial well-being and expand their benefits package will reap the benefits of a more engaged and productive workforce.
Thanks for reading — be sure to join the conversation on LinkedIn and let me know your thoughts on this topic!