Companies Paying Workers to Firm Up Their Finances
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What is the main topic discussed in this episode?
This is Your Money Matters from The Wall Street Journal. Welcome to Your Money Matters. I'm J.R. Whalen in New York. Financial problems are a common source of stress, and for companies it can mean distracted employees. Now many companies are doing something about it, and Wall Street Journal reporter Ann Turgason joins us to discuss it.
How are companies addressing employee financial stress by paying workers to save?
So, Anne, a growing number of companies are not just offering personal finance workshops like a lot of companies do, but they're actually paying their workers to get their finances in order.
There's a growing trend towards companies offering some kind of financial incentive to encourage workers to take advantage of the financial education system. opportunities that companies are making available to workers. These are not purely sort of classroom instruction, you know, sit down and learn about stocks and bonds and budgeting and things like that. A lot of these programs now take a more active approach and they try to get people to actually do things. So they try to get you to actually, you know, put together a budget and save more in your retirement account, save for emergencies. And so these companies are offering incentives, not just to get people to take the education classes, but also to take actions.
And it seems like companies are also very concerned about their workers' retirement funds.
Right. So I think underlying a lot of these programs, there's a recognition that it's not enough just to encourage people through company matches to contribute to 401k plans and save for retirement. You can incentivize people all you want to do that, but at the end of the day, if they are not good at managing their money in general... they're either going to not be able to save for retirement or not be able to save enough, or they might actually save, but then they start taking money out in the form of 401k loans. So, you know, that's sort of counterproductive.
And you mentioned in your story that a lot of companies are paying employees in the form of contributing to an emergency savings account if the employee does the same thing and they don't make a withdrawal.
Right. So there's a couple of companies that I spoke to that are focusing on the emergency savings account as something that they really want to bolster. So the idea being, you know, it'll help you overall sort of, you know, manage your money if you're able to put money away for an emergency every month. And hopefully that'll enable you to put money into a 401k that you don't then have to take out to pay for emergencies. So these companies, there was a trucking company called Pitt, Ohio, located in Pittsburgh, that is, they're giving employees a certain monetary payment if they're able to put money into an emergency fund on an automated basis for six months. And then if they can extend it for a full year, they'll pay them again.
So it's a full year's worth of sort of matching contributions to an emergency fund.
And this is not just companies trying to ward off stress and distraction among their worker base, but employees have stated in many surveys, including those in your story, that this is a day-in and day-out source of stress for them.
Right. So there is growing evidence that financial stress is very real and it's pervasive in the workforce. The Federal Reserve has found that 44% of adults don't have $400 to cover an emergency and
That brought me to a full stop in your story when I read that, because you can't predict when stuff is going to happen.
What active financial behaviors are employers incentivizing beyond classroom lessons?
Right. And inevitably, it does happen. So that's where you get a lot of this sort of financial kind of living from paycheck to paycheck and, you know, taking out, putting things on credit cards and running up, you know, debts here and there. So you end up with situations where people really just can't get on top of their finances and can't save for retirement.
We're speaking with reporter Ann Turgason, and you're listening to Your Money Matters from The Wall Street Journal. Welcome back, everybody. So, Anne, many companies are working with SunTrust Bank to offer their employees money for specific uses if the employee completes a financial education course.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:02–0:23
2
How are companies addressing employee financial stress by paying workers to save?
0:23–3:17
3
What active financial behaviors are employers incentivizing beyond classroom lessons?
3:17–5:47
4
How are employers encouraging emergency savings with matching payments?
5:47–5:49
Speakers
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