Companies Provide Employees with Emergency Funds
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What is the main topic discussed in this episode?
Here's your money briefing. I'm J.R. Whalen at The Wall Street Journal in New York. It's been well documented that many Americans do not have enough money put away in savings to help them through a financial emergency. And now some companies are doing something about that.
They need to help employees figure out how to deal with stuff like student debt, how to deal with stuff like emergency expenses, because there's a direct link to productivity. People don't come into work because they ran out of gas.
That's Wall Street Journal contributor Bailey McCann. She'll explain how these kinds of financial wellness programs work.
Why are employers launching financial-wellness programs to aid workers?
That's next.
Financial advisors recommend a rainy day fund for financial emergencies, even though a lot of employees struggle to put money away. But a lack of savings doesn't just affect their home life. It can also impact job performance. Some companies are starting to realize that, and they're launching financial wellness programs to help out when employees have trouble making ends meet. Wall Street Journal contributor Bailey McCann is on the line with us to explain how they work. So, Bailey, why are companies offering this service?
I think there's a growing recognition among employers generally that they need to help employees figure out how to deal with stuff like student debt, how to deal with stuff like emergency expenses, because there's a direct link to productivity. People don't come into work because they ran out of gas. People don't come into work because they have a flat tire and they just don't have the cash for it or whatever.
How do financial shortfalls affect employee attendance and productivity?
You know, people are opting out of their retirement plans because they want to put that money towards student debt or they just don't want to have their only cash tied up for that long. So, you know, employers have started to recognize that this is a growing problem for employees. And I think that's what's driving the emergence of these programs.
You mentioned helping out with student loans and some other services. What is the broad range of services that fall under the header of financial wellness?
It's a pretty expansive continuum and a lot of that is driven by the level of experimentation that's happening within individual companies. At the very basic end, it's a class on how to do budgeting or it's a class on these are how to do savings accounts or this is how to plan for your kid going to school, really basic stuff like that. Then at the more, I call it sophisticated end, It's like they'll do employer matching on your student loan payments so that you service that debt faster or you can get a hardship loan from your employer instead of taking it out of your 401k and taking the penalty on that. Or they'll do emergency savings accounts, which take, in many cases, a payroll deduction. It can be very small, like $20 every two weeks.
And they just put it aside, and then you have immediate access to that money at any time over the month without any penalty. But it just sets it for you, so you don't have to think about it.
Now, any funds that an employee might get from their employer –
is that separate from their salary it depends it really depends some will do it as a incentive so for example with the momentum on up plan you're doing it out of your own paycheck so there's no bonus necessarily but then when you have deposited for a given amount of time where you hit a certain threshold employers are then giving you a bonus like when you open a new checking account at a bank and you get that hundred dollars you know six months later or whatever Kind of the same idea for being in the program for following through on it. They might kick in a little bit or some really progressive employers might go ahead and do, you know, a one to three percent match similar to what you would see in a retirement account just to keep people going with it.
There are other incentives. Some employers have rewards programs where you can get, you know, gift cards or different things if you enroll in the program, which that's also happened with health benefits where they might cut you a discount on a Fitbit or something.
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