As providers of financial education, Financial Finesse (www.financialfinesse.com) experts are in tune with real world economics. The recession of the last 2 years has, of course, impacted large, faceless corporations. But we have all felt a decided ‘trickle down’ impact. Even those who are still employed are not immune from the stress and worry that comes from uncertainty about finances and the future.
In fact, when Financial Finesse asked employees a series of questions through an online survey, 96 percent of them reported feeling stressed about their finances, says Nancy Anderson, director of the company’s Think Tank. “And these are employed people,” she emphasizes.
The good news is that the troubled economy may be changing the way people think about money. But it also reveals a gap in the way we have collectively thought about it in the past. “I think this economy is like a double-edged sword in some respects,” Anderson says. “We have noticed a trend of people focusing on their short term finances. Debt has been a big focus for the last 3 years, and we’ve seen an increase in budgeting and saving calls.”
Of course, paying off debts and saving money is great, but it comes at a cost in terms of long-range saving. While many people now see the need to rid themselves of debt and save for emergencies, that focus ties up money they could be investing for their retirement.
“Having an emergency fund is a very fundamental part of a financial plan that many people have been missing for years,” Anderson says. “It sounds simplistic, but it’s very important because it creates financial stress when people have to live month to month.” The financial stress results in a less-productive workplace, when worried employees focus on answering (or avoiding) calls from creditors and wonder how they’re going to pay the bills. Some may even be distracted by the demands of a second job.
The lessons of this economy will be felt for a long time. Anderson says, “People have been using their home equity line of credit as an emergency fund or as their college planning, instead of having money saved. But we’ve been hearing people saying ‘I never want to be in this position again.’ If employees take this as a lesson and continue on the habits they have developed in the last year, it may be a real help in the long run.”
Providing personal financial tools to your employees can help. Anderson recommends finding a provider that does not sell products to employees, and is, therefore, in a position to provide unbiased advice. Make sure the provider offers up-to-date topics, like Investing in Today’s Market, and that they can include your company’s own benefits package into their financial workshops. “Doing that can increase employee appreciation for the benefits you’re providing, and may help in retention.”