We are currently faced with a financial epidemic: many employees are on unstable footing due to debt challenges and a lack of emergency savings; others abruptly find themselves responsible for both their aging parents and dependent children. There’s no doubt about it – many employees are financially stressed.
These financial burdens can have negative effects at home and in the workplace, impacting health, relationships, and productivity. As an employer, this should concern you – aside from the possible adverse bearing on your company’s bottom line, it’s also discouraging to know financial stress can have the power to derail top employees.
In fact, 45% of employees say financial matters cause them the most stress in their lives. We believe it’s essential to closely and honestly examine the financial wellness programs currently in place within your company – are they adequately addressing your employees’ needs? Are they producing the behavioral changes necessary to improve employee well-being? If they’re not, consider the following:
Problem: More than a quarter of employees are using credit cards to pay for monthly necessities because they can’t afford them otherwise – and it’s an issue across all income levels.
Suggested courses of action: Host a budgeting and debt management course to help employees understand where their money is coming from, as well as where it’s going. Teach employees how to monitor their credit scores, emphasizing the power of compound interest and how it can either work for or against them.
Problem: Among employees with student loans, a large percentage indicate these are having a moderate to significant impact on their ability to meet other financial goals.
Suggested courses of action: Provide resources to educate employees about student loans and possible payment plans. Offer opportunities to learn about college savings plans to help ease future student loan burdens. Implement a student loan repayment benefit as part of your overall benefits package.
Problem: 47% of employees have less than $50,000 saved for retirement.
Suggested courses of action: Participants must understand the importance of starting early, how to take advantage of the company match, and what kind of gap they face between what’s saved and their retirement-ready futures. Make sure you’re providing sufficient education about your company’s retirement plan, how to enroll, your recordkeeper and their website, and where they can go with any kind of financial questions.
The Shepherd Financial team specializes in customized financial wellness programming, so we’d love to have a conversation about how we can improve your employees’ well-being. Connect with us today at 844.975.4015 or shepfinteam@shepherdfin.com.
Source: pwc, Employee Financial Wellness Survey, 4.16
Valentine’s Day reminds us now is the perfect time for ‘the talk’ with that special someone in your life. And since this is a financial blog, I obviously mean the money talk. True, communication can be challenging, and the topic of money is a sore spot for many people. But the more you can speak honestly about money, the less fear and anxiety will be wrapped around it. The dialogue may look different based on your relationship status and life stage; regardless, it’s important to have the conversation now, as well as make room for future conversations.
You may benefit from making individual financial balance sheets, including all your debt and savings, before you begin talking. This way, you’ll have a better idea of your net worth. You may also compile a list of money questions or concerns you’d like to cover. It’s worthwhile to discuss your current financial situation, share values and long-term goals, and talk through spending and saving habits. Not being willing to talk about money can lead to big issues, both now and down the road. Open communication, though, gives the opportunity to create shared vision for the future, tackle problems as a team, and have accountability for your financial decisions.
Determine your own money values. This is where you’ll examine if you value saving or spending, as well as think about the various lifestyle standards you have. If you’re single and value the ability to travel, you’ll likely take that value into a relationship. Potential partners may discover conflicting values. Married couples may disagree about saving for college for their kids versus boosting their own retirement savings. It’s ok to disagree, but finding common ground is key. And keep the big picture in mind: creating safe space for ongoing dialogue about a positive financial future.
It’s also critical to come clean about your financial baggage. If you have student loan debt or a spending habit you’re having trouble kicking, hiding the issue will only compound it. (Literally – interest either hurts debtors or helps savers, but it doesn’t sit still.) Once you’ve talked about where you’ve been and where you are, look ahead. Are there any financial obstacles ahead? What are you hoping to do with your money in the future? Highlighting these can help you better see how to actually plan for the future.
Of course, not every money conversation needs to be so in-depth, but it helps to check in at least once a month to ensure you and your partner are on the same page, spot any problem areas quickly, and maintain momentum toward your goals. Your first financial talk together may be a little awkward, but with time, you’ll become fluent in a shared money language.
The holiday season is officially in full swing – Halloween and Thanksgiving decorations have been tucked into their boxes and shoved to the back of the attic until next year; meanwhile, icicle lights seem to have sprouted overnight, attaching themselves to just about everything in sight. The smell of gingerbread permeates the air. Bell ringers shout greetings, and reindeer antlers are worn by both children and adults with equal delight. If that doesn’t put you in the mood to watch White Christmas, Elf, or Home Alone, I just don’t know what will.
This time of year, though, can be not-so-merry for many individuals and their budgets. The days following Thanksgiving are particularly fraught with perils: Black Friday, Small Business Saturday, Soon-to-be-Hanukkah Sunday, Cyber Monday, Not-Quite-Christmas Tuesday. (Sadly, most of these are real.) Radio ads blare their three-year, interest-free payment plans to buy things you can’t afford now, like diamonds or laptops or golf clubs. Everywhere you look, there’s a sense of urgency to spend money: Buy now! Sale ends soon! One day only!
I’m here to give you permission to pause. Halt the holiday madness and take a step back. Pull out of the moment and decide: is this worth it? Is it worth the money you’ll spend or the stress you’ll bear?
I know it’s an unpopular sentiment, but this may be the one thing that keeps you sane. Repeat after me: you don’t have to do it all, buy it all, or be it all.
If you’re already stressed about money, buying into the notion you must spend more to make others happy will only worsen the situation. So try something new this season: buy less and do more things that truly feel worth it to you. You’ll enjoy the carols, snowflakes, and memories more now; as a bonus, you won’t start the new year with a fistful of receipts and a maxed-out credit card.
I’m not endorsing becoming a scrooge – simply be selective about where you invest your time, energy, and money. You’ll be surprised at how implementing this small practice gives the same permission to others. Suddenly, all our hearts are growing three sizes, and it really might just be a wonderful life after all.
Wishing you a merry, bright, and peaceful holiday season!
As the onslaught of end-of-school activities, exams, and graduation parties begins to fade, parents may heave a sigh of relief. Summer at last! The relief is short-lived, however, if you gaze slightly down the road. Whether your child is five or fifteen, college may very well be in their future. Have you begun thinking about how to pay for those expenses?
There’s simply no better time to begin planning than today. From harnessing the power of compound interest to hopefully avoiding drawing from your own retirement savings, there are a number of benefits to starting early.
One of the most flexible and affordable resources available to help fund a child’s future education is a 529 savings account. You can utilize tax-advantaged investing (earnings grow tax-deferred and are free from federal income tax when used for qualified higher education expenses), low fees and expenses, professional investment management, and potential state tax deductions or credits.* Here in Indiana, contributions to a CollegeChoice 529 account are eligible for a state income tax credit of 20%, up to a $1,000 credit per year.
In most plans, your choice of school is not affected by the state in which your 529 savings plan was established. Additionally, the funds in the 529 plan can pay for any eligible 2- or 4-year college, graduate school (including law and medical), or vocational/technical school. Tuition is not the only expense covered by 529 funds – other qualified expenses include textbooks, computers, and certain room and board costs. Even if your child is already in high school or uncertain if they want to go to college, you may still benefit from opening a 529 account. Aside from tax-deferred earnings, any unused assets may be rolled to another eligible family member’s account. Many 529 plans feature gifting programs that give family and friends a unique code to contribute to the account.
There are other funding options for higher education, including Coverdell Education Savings Accounts, federal and state grants, scholarships, and a variety of loans. If you have questions, our team at Shepherd Financial is always ready to help clear confusion and create solutions for your family.
Participation in a 529 College Savings Plan (529 Plan) does not guarantee that contributions and investment return on contributions, if any, will be adequate to cover future tuition and other higher education expenses or that a beneficiary will be admitted to or permitted to continue to attend an institution of higher education. Contributors to the program assume all investment risk, including potential loss of principal and liability for penalties such as those levied for non-educational withdrawals. Depending upon the laws of the home state of the customer or designated beneficiary, favorable state tax treatment or other benefits offered by such home state for investing in 529 Plans may be available only if the customer invests in the home state’s 529 Plan. Consult with your financial, tax, or other adviser to learn more about how state-based benefits (including any limitations) would apply to your specific circumstances. You may also wish to contact your home state or any other 529 Plan to learn more about the features, benefits, and limitations or that state’s 529 Plan. For more complete information, including a description of fees, expenses, and risks, see the offering statement or program description.
*To find out if your state offers tax deductions or credits for contributions, visit savingforcollege.com.