We’ve written about how the lack of financial security is a catalyst of increased turnover, absenteeism, and overall financial unwellness. It’s easy to read about financial insecurity and not link the struggles to the employees who work at your organization. But, it is more than likely a percentage of your workers are currently struggling to make ends meet.
HomeServe USA, a home repair service, recently ran a survey detailing the landscape of Americans and their finances. The survey showed that 50% of people in the United States are financially unprepared for an emergency.
Nearly 19% of Americans have nothing set aside to cover an unexpected emergency. Even further, nearly 31% of Americans don’t have at least $500 set aside to cover an unexpected emergency expense.
This means, if finances are already tight, one illness or car issue could send your employees into financial disrepair.
Another survey, by insurance company MetLife, found that 49% of employees are “concerned, anxious or fearful about their current financial well-being.” When someone is unable to adjust to surprise financial emergencies, it means they are financially unwell and have limited options to turn to for help.
An obvious place to turn for a bit of extra cash is credit cards. According to a PwC survey, half of Gen X respondents find it difficult to meet their household expenses on time each month. This is compared to 41% of millennial employees.
As a response, 7 in 10 millennials carry balances on their credit cards. Additionally, 45% use their credit cards for monthly expenses they could not afford otherwise. Gen X employees are worse off, saying that 63% carry a credit card balance.
Someone seeking a bit of extra cash could also use payday loans. However, they have many negative implications.
Payday loans have exorbitant interest rates and can also rope people into the endless payday loan cycle. When someone takes on a payday loan and can’t afford to pay it back, they are then offered a renewal on the loan for an additional fee. The interest rates and fees continue to pile on. This cripples the borrower’s financial wellness even more.
Realistically, employers cannot be fully responsible for money mismanagement or financial hardships. But becoming empathic, and finding a solution that works for both the employee and the employer could be invaluable to your employees.
While it’s not viable to increase wages across the board or personally assist everyone with their budgeting capabilities, it is possible to extend an incentive.
DailyPay’s software allows users of the app to see how much money they’ve earned since their last paycheck, and are able to withdrawal any amount, up to their total earnings, whenever they’d like. DailyPay is free for businesses and completely non-disruptive to payroll.
DailyPay could mean the difference between a late fee on a rent check, someone using their credit card unwisely, or seeking a payday loan for a small amount of help. Learn how DailyPay can pair with your business.