By Caroline Mathews, National News Writer
According to a newly released report from Bankrate, nearly six in ten Americans do not have enough savings to cover a $500 or $100 unplanned bill. With only 41 percent of American adults having enough in their savings account to cover an unexpected expense of this magnitude, 20 percent reported that they would put the expense on a credit card; a further 20 percent said they would cut their spending, and 11 percent would turn to family and friends for assistance. Although this number has improved over the last year—when only 37 percent of Americans reported the ability to cover an expense of $500 or more—Jill Cornfield, a retirement analyst from Bankrate, says Americans have consistently struggled with handling short-term finances and spending. Personal finance experts continue to stress the necessity of having an emergency fund to cover unanticipated expenses in order to avoid long-term financial harm, but creating a cash nest egg seems like an unrealistic task for many—especially those living paycheck to paycheck.
The American Psychological Association published a survey in 2015 citing a staggering 72 percent of adults say they worry about money, according to the International Foundation for Employee Benefit Plans. As a result, executives of top companies are noticing that “employees are coming to work with a cloud hanging over their heads. They are distracted by student loans and credit-card debt, thus negatively affecting their productivity in the workplace. The strain of living paycheck to paycheck is impacting productivity, stress, and well-being.” In order to alleviate the employee stress, companies are beginning to use incentives to increase participation in financial-wellness programs. Aetna Inc., Pitt Ohio LLC, and SunTrust Banks Inc., are just a handful of companies handing out cash and other inducements to workers who taking measures to clean-up their finances by reducing debt, funding emergency-savings accounts, and attending financial-education classes and meetings with personal finance experts. Currently, 17 percent of large companies offer financial-wellness programs that integrate online tools, while 42 percent offer one-on-one financial-wellness consultations; more than half of employers say they intend to take action this year to create or enhance such programs.
Aetna Inc., has begun to match up to $2,000 a year of student-loan repayments for full-time employees who graduated from college after Dec. 1, 2013 . In 2016, Pitt Ohio LLC began offering $56 to employees who contribute $19 a week for six months to an emergency-savings account without making withdrawals; employees who continue this trend for another six months can qualify for another $56 disbursement. The Pittsburgh-based trucking company says that half of the eligible employees have voluntarily participated in the program, with 92 percent earning the first $56 payment. In total, the company has spent more than $100,000 on the incentives. SunTrust Banks of Atlanta offers $1,000 to any employee who completes a financial-education course on topics like budgeting, reducing debt, and making automatic contributions to emergency savings; employees may use the $1,000 to reduce debt or fund an emergency, 401(k), or a health-savings account. The bank has spent over $9 million in incentives, with more than 20,000 current and past-employees having participated. SunTrust Banks now offers the program at cost to more than 80 other companies—including Delta Air Lines Inc. and Home Depot Inc.—though, one-third of these companies boast their own financial-wellness programs in conjunction with SunTrust’s.
More than 95 percent of the participants at companies with financial-wellness programs now have emergency-savings accounts—a 68 percent increase from the time of enrollment—with the average increase of $1,254 in balance. Companies are hoping these positive trends continue, as they aim to improve their employees’ well-being and productivity by reducing excessive financial stress.
A version of this article appeared in the Tuesday, February 27th print edition.
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