How to Help Your Employees Build Financial Resilience

Employers have a role to play in helping employees build financial resilience. Find out some strategies that can help prepare your employees for unexpected financial crises or losses.

Amid mounting inflation, geopolitical concerns and ongoing economic uncertainty, many workers are turning to their employers for financial guidance. In fact, according to the 2022 Morgan Stanley at Work State of the Workplace Financial Benefits Study, 84% of employees feel their employers should be more involved with helping them through their financial challenges.

In a survey conducted by the Employee Benefit Research Institute (EBRI) and Greenwald Research,¹ 60% of employees admitted to being at least moderately concerned about their household’s financial well-being. Additionally, 48% of employees said they do not have enough savings to handle an emergency or sudden large expense. Taken together, these numbers seem to show that many workers may be struggling to build financial resilience, which the World Economic Forum defines as “the ability to deal with an unexpected loss of income or financial emergency”. ²

There are several ways employers may be able to help employees enhance their financial resilience, such as educating them about savings strategies, fostering a culture of financial support and introducing a financial wellness program. Here we look at some of these strategies.

Replenishing Savings

Employers have a role to play in helping to support a strong recovery for both employees and the economy at large. One way to achieve this objective is by discussing savings strategies with your employees. While these approaches to saving may not be new to you as a plan sponsor, they may be brand new for your employees—underscoring the role that workplace financial education can play.

Consider starting the conversation by sharing these two savings strategies:

1. Savings Buckets

One way to enhance financial resilience is by getting into the habit of saving a certain amount of money each month. Rather than simply setting this money aside in one lump sum, however, it may be helpful to allocate those savings towards priority goals by creating “savings buckets”. The idea is to add a certain amount of money into the first savings bucket (which represents the highest priority savings goals) before starting to fill the next bucket.

Notionally, employees can create as many savings buckets as they choose, depending on their savings goals. To explain how this concept may work in practice, however, here is one way to structure savings buckets:

2. The 50/30/20 Budgeting Rule

This percentage-based principle is a different type of savings strategy, and it helps to guide how money is spent and where it goes:

Financial Resilience in Action

Sharing savings strategies with employees is an important first step in helping them achieve greater financial resilience. To encourage follow through, however, workplace culture also plays a role.

By approaching money conversations in an honest, clear, relatable manner, plan sponsors can potentially help to reduce the perceived stigma employees may feel if they are struggling financially. This may mean discussing saving strategies as part of regular team meetings, while giving staff the opportunity to follow up privately through open door policies. It may mean providing employees with access to a financial coach or advisor who can help them make more informed financial decisions. It may even mean setting up a formal Employee Assistance Program (EAP) to give employees a safe space to discuss their financial concerns.

No matter what approach your organization takes, the key is to provide employees with the confidence to take charge of their financial wellness—which may ultimately enhance both their personal well-being and their workplace productivity.

Rising Together

Offering a comprehensive and dynamic financial wellness program becomes increasingly important in an environment of economic volatility. To meet growing employee expectations for financial support and guidance, employers can help employees examine their financial situation to better prepare for the future.