Companies concerned about employees' money stress are spending millions to branch out beyond 401(k)s
- A growing number of American companies are incentivizing workers to build up emergency funds, reported Anne Tergesen for the Wall Street Journal.
- SunTrust Banks has reportedly spent $18 million on its program, which gives $1,000 to employees who, in part, complete a personal finance education course and set up automatic contributions to an emergency fund.
- Financial experts recommend building an emergency fund with enough money to cover at least three to six months worth of expenses and keeping it in a high-yield savings account or money-market account.
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An increasing number of American employers are stepping up their role in their workers' personal financial lives.
A recent Wall Street Journal story highlighted a widening trend in employer-employee relations: Companies are making big investments in their employees' financial well-being by implementing crash courses on money and contributing to employees' emergency funds, reported the Journal's Anne Tergesen.
SunTrust Banks has reportedly spent $18 million on its program, which gives $1,000 to every employee who, in part, completes an eight-part personal finance course and sets up automatic deferrals from each paycheck into emergency savings, Tergesen reported. Meanwhile, investment manager BlackRock recently pledged $50 million to help employees build emergency funds.
Companies are concerned about employees' preparedness for retirement, as ever, but also hoping to curb financial stress on the job, Tergesen reported. The stress can frequently stem from unexpected medical or housing expenses cropping up and the employee having no emergency stash to draw from.
A 2017 survey conducted by Willis Towers Watson asked 31,000 United States employees in 22 markets about health and well-being related to work. In the study, over one-third of employees reported their financial situation is negatively affecting their lives, Business Insider previously reported.
Additionally, the study found employees who are struggling financially describe their health as "poor" and 31% say their money concerns affect work. In contrast, workers who did not report financial unrest say they are in good health, with only 5% claiming high stress levels.
Financial experts recommend building an emergency fund with enough money to cover at least three to six months worth of expenses. Typically, the best place to store emergency savings is in a high-yield savings account or money-market account. Either of these will keep savings safe and accessible, but also earn more interest than your traditional savings or checking account.
With enough cash stashed away for emergencies, workers can then focus on saving for retirement and investing. For those who struggle with student loan repayment, some companies are stepping in to help lessen the burden.
Importantly, it's not just companies in the finance sector that are privy to the cause. Clothing retailer Levi Strauss and grocery chain Kroger are among the hundreds of companies offering some version of an emergency fund assistance program that provides employees with educational courses as well as matching contributions, Tergesen reported. These programs are largely run by outside nonprofits.
Home improvement retailer Home Depot is among more than 200 companies that have paid SunTrust to implement its financial education program within their company, Tergesen reported, and the results appear largely positive. The average employee participating in the program has increased their emergency fund balance by $1,200 since completing the financial crash course, according to Brian Nelson Ford, a financial-well-being executive at SunTrust.
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