By encouraging employees to start saving for the holidays, sponsors can help employees make planning for future events a habit. This microdosing future plans can help employees who may have put off enrolling in 401(k) plans.
The holiday season delivers joy and, for some, pain. While it may be the season for celebrating and gathering, doing so can swell credit cards as well as hearts. Plan sponsors can help their employees go from grinch to gold star by providing effective budgeting strategies. These tips are as evergreen as your tree, meaning they can be used long past the holiday season. And budgeting tips bring gifts for employers too. Employees with less financial stress have higher productivity rates.|
Many human resource departments provide more than just access to forms on their internal drives (such as SharePoint). Training videos have often been housed on those drives and HR departments often include educational programs from their plan administrators. While financial literacy and wellness have become part of the benefits some companies offer, some employers have been slow to add worksheets and training on financial basics, such as budgeting. Budgeting can help prevent overspending, which can to financial consequences like high credit card debt and the inability to contribute to other savings goals. [1] By encouraging employees to start saving for the holidays, sponsors can help employees make planning for future events a habit. This microdosing future plans can help employees who may have put off enrolling in 401(k) plans.
Plan sponsors can use holiday spending as an opportunity to highlight their financial wellness tools. And employees can better manage their finances this season while learning how to put aside money for other areas, like emergency savings and retirement.
Plan sponsors can emphasize how using a budget for holiday spending can help employees stay within their retirement savings plan. By not overspending at the holidays, employees won’t increase credit card debt, decrease emergency accounts, or even borrow from retirement accounts. To do so, sponsors may want to consider using case studies along with several versions of a budgeting template. Among the options for case studies could be to walk through the option of having set separate savings account for holiday expenses or how contributing small amounts over time can help.
Sponsors can also create a budgeting template that they can provide on their financial wellness, or HR internal drives. That template should include a realistic look at all expected costs, like gifts, travel, entertainment, decorations, and celebratory dinners. The template may want to instruct employees to total up all these expenses, compare that to what money they actually have to spend, and set a limit on how much money there is to spend total. Additionally, there could be ways to ensure planning for surprise expenses that may arise during the holiday season are accounted for in the form. This allows employees to build extra padding into their budget.
In addition to a template, plan sponsors can help their employees by providing resources for budgeting, like workshops or guides. For the nearly 50% of employers who offer financial wellness benefits, these workshops and guides should nestle into the established program.
In addition to providing budget templates, financial guides, and savings encouragement, employers can highlight their employee assistance programs. Sponsors may want to use the holiday season as a way to encourage use of the financial wellness aspects of those programs. For example, some EAP programs include financial coaching or advisory services. These services can help them gain a deeper understanding of their financial habits and offer strategies to prevent falling into debt.
When employees learn how to effectively budget for the holidays, they can also take those budgeting techniques with them for the rest of the year. This has a positive impact on an employee’s financial wellbeing not just in the short term, but in the long term. Employers can help their employee’s financial security by providing resources and education they need to develop healthy financial habits. In turn, employees are more focused and productive.
[1] One of the biggest barriers to saving is credit card debt: https://www.linkedin.com/pulse/why-debt-biggest-barrier-retirement-savings-insiders-perspective
These articles are prepared for general purposes and are not intended to provide advice or encourage specific behavior. Before taking any action, Advisors and Plan Sponsors should consult with their compliance, finance and legal teams.
Before leaping into the unknown, we recommend a thorough examination of your plan. Because we are experts in the field, we know the marketplace and know what your existing vendor is capable of offering. Through this examination, we can help you optimize the service you receive.
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