SoFi

From the economic impacts of the Covid-19 pandemic to record-high inflation to interest rate hikes from the Federal Reserve, the last several years have been plagued with financial unrest.

That may explain why only 48% of U.S. adults say they have enough emergency savings to cover at least three months’ worth of expenses, according to a new Bankrate survey. That’s nearly unchanged from 2022, when inflation reached a 40-year high.

For many Americans, this lack of reserves is a source of stress. The Bankrate survey found that a full 57% of U.S. adults are uncomfortable with the amount of emergency savings they currently have.

HR leaders have taken note. In fact, a growing number of employers now offer ways to help employees bolster their backup savings as part of their overall financial wellness benefits. If you’re interested in being one of them, read on. What follows are six moves that can help your organization build an emergency auto savings program that works best for your employees and your company.

1. Evaluate Employee Needs

The pandemic demonstrated that a huge percentage of employees in all salary ranges weren’t financially prepared for what was to become one of the most unprecedented periods of history.

This lack of preparedness added to an already stressful situation (working remotely, worries about health, child and elderly care needs, et cetera). Even as we move beyond the pandemic, however, employees are still on edge. SoFi at Work’s Future of Workplace Financial Well-Being 2022 study found that 75% of U.S. workers are facing at least one source of major financial stress. What’s more, employees are spending over nine hours per week while at work dealing with issues related to their financial situation (that adds up to a full 12 weeks of work each year).

Adding an emergency savings plan can help employees alleviate a significant amount of financial stress and provide a solution to the lack of short-term savings. This might be especially appealing for younger members of your workforce who may have fewer resources to rely on than older employees.

To determine how effective an auto savings program will be for each segment of your staff, you might think about creating a preliminary survey of employees to see what they feel they need most from a short-term savings plan.

Consider the following questions:

•   Will you participate or do you feel there are already too many demands on your paycheck?

•   Are you more likely to join if the company offers a match or initial contribution?

•   Will you gravitate to emergency savings in lieu of long-term retirement savings?

•   Do more accessible after-tax savings in a 401(k) account that can be used for emergencies appeal to you?

•   Do you think a separate emergency auto account will help you think about saving for specific needs?

2. Check Out the Competition

A good next step is to determine what competitors are offering their existing talent and new recruits in the short-term financial wellness arena. For example, is an emergency auto savings program common among companies competing for your talent? Do most competitors offer a match or contribution to get employees, especially new hires, started?

Use the results of this data and the survey of employees to devise the most effective program for your employees (see below) and, importantly, to help convince team members and management why an emergency auto savings program is right for your company’s total rewards strategy.

3. Determine the Impact of an Emergency Savings Program on Your Total Rewards Strategy

In recent years, you’ve likely had to shift or alter some of the components of your total rewards strategy, including compensation, benefits, flexibility, performance recognition, and career development. In light of those changes, where does an emergency auto savings benefit fit into the new reality? How does it fit with your HR financial wellness goals and business strategy?

The answer is likely very positive. It’s hard to imagine a total rewards strategy that doesn’t have a place for emergency auto savings, especially in light of recent times.

That said, it’s important that you structure and implement this benefit in a way that not only fills a need but enhances your overall strategy to retain, attract, and maximize talent. Be aware that when you add an important benefit such as emergency savings, you may shift the balance in your employees’ financial well-being focus from long-term to short-term goals.

As you implement the plan, you may need to realign your employee value proposition and total rewards strategy to encompass current and immediate needs while redoubling your efforts to educate and motivate employees on long-term financial wellness goals such as saving for retirement and healthcare costs.

4. Select the Solution and Roll Out Best for Your Goals

At SoFi at Work, we’ve found that selecting the right solution is critical to the utilization and effectiveness of every benefit in your total rewards strategy. Following the McKinsey framework can work well for all types of benefit rollouts, including emergency auto savings programs. These four principles can also help ensure benefit rollouts are integrated into your business strategy.

Choose Partners Wisely

Almost every benefit entails an outside partner to help administer and execute. Automatic emergency savings is no exception. Look for credible partners that can provide expert support and advice to a wide variety of employees with varying financial needs. For emergency savings, you’ll want to find a bank, credit union, or other financial institution that offers a low-cost, easy-to-use platform, like SoFi At Work’s Emergency Vault or open a Checking and Savings account with SoFi.

Focus on What’s Feasible

Make the program feasible to launch, which will help you make meaningful progress for employees in the short term as you lay down the foundation for long-term initiatives. This is key with emergency savings rollouts because by helping to relieve some short-term financial stress, you allow employees to focus on long-term goals sooner rather than later.

Make It Sustainable

Sustainable programs are able to flex with your business over time and during uncertain business conditions. Can your emergency auto-save program survive through the next period of uncertain business conditions? To answer this, your company may need to weigh questions such as whether the engagement benefits of a match outweigh the cost of sustaining the program? Is the plan flexible enough to undergo changes in the economy, your workforce, and your business strategy over time?

Get Personal

Enable personalization where you can. This way, employees are likely to feel emergency auto savings can help meet their unique needs. Offering a range of amounts that employees can automatically withdraw is the first step toward personalization. Providing calculators and other educational tools that help employees determine how much they need to save and how much they can afford to save is another personalization tactic.

Recommended: How Much Should Your Employees Have in Emergency Savings?

5. Use Communication Effectively

Top-notch communication techniques can help you drive participation and, importantly, change savings behavior in your workforce.

When asking for participation and engagement, lead with empathy. If there’s one thing the pandemic should have taught us, it’s that one size doesn’t fit all when it comes to supporting employees, who have had many different experiences and have many different needs.

Coordinating communications about the importance of emergency savings with other financial well-being education programs can help get the word out in an immediate and holistic way.

Clarity is Key

Accompany your rollout with extremely clear communications telling employees exactly what they can expect, including:

•   How payroll deduction works

•   How much — or how little — employees can save in the account

•   Calculators, tools, and education efforts designed to help employees determine what they should/can save

•   Thorough explanation of any company match offered — how much, how often, and portability

•   Which bank, credit union, or other financial institution will run the account?

•   How much, if any, interest will be earned

•   How withdrawals can be made

•   The fact that withdrawals can be made for any reason, no questions asked, with no penalties or tax consequences

•   A reminder that if employees leave the company, they may easily transfer the account to their own savings

Meet Employees Where They Are

Make sure effective and thorough communications are available across platforms so you can keep up with your far-flung workforce. Simply posting on the company website and hoping people sign up won’t work, especially in these times when your remote workforce may be feeling more disconnected from corporate communications than ever.

In all communications, make sure you take a multi-platform, consumer-grade, mobile-native technology approach.

6. Take Ongoing Pulse Checks

To determine engagement and any ongoing tweaks that need to be made, you’ll want to establish metrics to measure success at least quarterly. Then you’ll want to benchmark those results against your competitors and national averages to add an “outside-in” perspective.

Solicit employee input on the success of the program in three ways — employee surveys, focus groups with critical talent segments, and analysis of recent departing employees and job candidates who declined an offer.

Metrics can also help you track how well the benefit is supporting business goals. For instance, a customer-service-oriented company may find a higher focus among phone reps and fewer errors when staff is less burdened with financial worries.

The Takeaway

These six concepts are designed to help you build a successful, engaging, and effective emergency auto savings plan. By reducing employee stress and increasing productivity and loyalty, you’ll help promote financial well-being in your workforce as well as enhance your company’s total rewards strategy and overall business objectives.

Photo credit: iStock/alvarez

Products available from SoFi on the Dashboard may vary depending on your employer preferences.

Advisory tools and services are offered through SoFi Wealth LLC, an SEC-registered investment adviser. 234 1st Street San Francisco, CA 94105.

SoFi Student Loan Refinance Loans, Personal Loans, Private Student Loans, and Mortgage Loans are originated through SoFi Bank, N.A., NMLS #696891 (Member FDIC), (www.nmlsconsumeraccess.org ). The 529 Savings and Selection Tool is provided by SoFi Wealth LLC, an SEC-registered investment adviser. For additional product-specific legal and licensing information, see SoFi.com/legal. 2750 E. Cottonwood Parkway #300 Cottonwood Heights, UT 84121. ©2024 Social Finance, LLC. All rights reserved. Information as of November 2024 and is subject to change.


Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOBD0723001

Providing an emergency savings account (ESA) is fast becoming a way to help provide a foundation for financial well-being. With only 48% of U.S. adults saying they have enough emergency savings to cover at least three months’ worth of expenses, according to a new Bankrate survey, providing an emergency savings program that’s easy and accessible helps tell your workforce that you know what they’re going through and you’re there to help.

That said, HR professionals who are already managing an ESA, in the process of introducing one, or considering a rollout all face a basic yet important question: How much should their employees stash away in these accounts?

Clearly, employees themselves have the final say. But an efficient plan structure with appropriate minimums, maximums, and matches; solid guidance; and accessible educational efforts can go a long way toward spurring engagement and helping workers make the most of this important benefit. Let’s take a closer look.

Finding the ESA Sweet Spot

When offering guidance on how much to save for emergencies, employers may want to aim for the “sweet spot.” That’s somewhere between essential short-term savings and a continued focus on long-term financial goals.

Finding this can be tricky. Take ESAs and 401(k) savings, which often have a direct effect on each other and present HR professionals with a bit of a conundrum.

On the one hand, ESA savings can improve overall financial health and help employees avoid withdrawing funds from their 401(k) savings early, preventing any potential tax penalties and lost income in those accounts.

Having the cash stashed away to weather financial upheavals can also add to employees’ long-term financial well-being.

But by the same token, too much emphasis on short-term savings may dampen employees’ willingness to save in traditional retirement accounts. This is especially true in today’s economic climate, when workers are navigating a high cost of living, elevated interest rates, uneven wage growth, and concerns about an economic slowdown.

Employers can help employees balance this short-term/long-term financial tension by helping them understand their individual savings needs, goals, and risks of encountering unexpected expenses.

Recommended: Supporting the Financial Well-Being of Newly Hired Recent Graduates

Rethinking Conventional Wisdom about Emergency Savings

One way to do that may be to look beyond the traditional advice concerning emergency savings. Financial institutions, such as Vanguard and Fidelity, often recommend that clients save three to six months’ worth of expenses (or more) in a cash or cash equivalent account in case of a job loss, medical issues, or other income disruptions.

But some experts believe that lower-, moderate-, and even some high-income workers may be discouraged by that goal and give up on emergency savings altogether. Setting more achievable dollar figures, such as $500 or $1,000, may be more realistic and more motivating than the traditional advice.

To get employees started, encouraging them to save realistic amounts for common unexpected expenses may offer them a more accessible goal than the three-to-six months’ worth of expenses formula. Once they reach that initial goal, they may be motivated to keep going and build up a more substantial financial safety net.

Keep in mind, the “goal” for emergency savings is fluid. The idea is for your employees to build a cushion, use it as needed, and then replace those funds and build the account some more. That’s why a hard-and-fast number doesn’t always work. Focusing on regular contributions that keep the fund functional can be more important.

Recommended: 4 Ways HR Pros Can Better Support Financial Wellness

Calculating Minimums, Maximums, and Matches

Benefit design can go a long way toward motivating employees to engage in emergency savings. Flexibility is key.

Minimums and Maximums. When you’re setting up a savings benefit of this kind, there are usually minimums and maximums involved. In many cases, employers work with an outside bank/vendor that may have its own restrictions. You may also want to impose some structure to run the program efficiently and engage your employees.

Keep in mind, minimums need to be low enough to engage, not overwhelm, workers. Amounts as low as $25 to $50 a week are not uncommon. Once the momentum starts and employees see balances increasing, they may want to increase the amount they’re depositing. Make sure this process is easy for them to do. And remember that flexibility is key. If an employee must miss a month, consider not imposing any penalties. Otherwise, you may discourage an employee who happens to be temporarily strapped that month but who does want to save.

Maximums can be an important tool in ensuring that employees aren’t overly focusing on short-term savings or disregarding their 401(k) and other long-term savings goals. You’ll want to use the tools and information outlined above to set a thoughtful maximum that will help employees successfully cover unexpected expenses and, at the same time, increase their confidence for long-term goals.

When determining maximum amounts, you’ll also want to consider whether excess contributions can spill over into other types of saving programs, such as after-tax retirement contributions. This requires more administration but can be a useful tool to help employees balance short and long-term savings goals.

Auto-Enrollment. HR professionals have seen how automatic enrollment in 401(k) plans has significantly increased participation. The same may hold true for auto-enrollment payroll deduction ESAs, in which a small portion of each employee’s paychecks is automatically deposited into an employer-sponsored account. Recent Consumer Financial Protection Bureau guidance easing government restrictions has made it easier for employers to implement automatic enrollment for emergency savings.

Using the information outlined above to determine the percentage deducted for each level of your workforce can help make these automatic payments accessible and sustainable.

Employer Match. Kicking in an initial amount to help employees get their emergency fund started or offering a match tied to employee contributions can provide a strong incentive for employees to start saving.

One company might match employee contributions up to $40 a month. Other employers may provide a contribution once the employee has hit a certain savings threshold like, say, $250. For a relatively low cost, your company can provide a match that can help employees hit their emergency savings targets faster, improve their engagement, and enhance their overall financial wellness.

The Takeaway

SoFi at Work can help you and your team implement a successful emergency savings program, including guidance on how much your employees should save for unexpected expenses.

Photo credit: iStock/katleho Seisa

Products available from SoFi on the Dashboard may vary depending on your employer preferences.

Advisory tools and services are offered through SoFi Wealth LLC, an SEC-registered investment adviser. 234 1st Street San Francisco, CA 94105.

SoFi Student Loan Refinance Loans, Personal Loans, Private Student Loans, and Mortgage Loans are originated through SoFi Bank, N.A., NMLS #696891 (Member FDIC), (www.nmlsconsumeraccess.org ). The 529 Savings and Selection Tool is provided by SoFi Wealth LLC, an SEC-registered investment adviser. For additional product-specific legal and licensing information, see SoFi.com/legal. 2750 E. Cottonwood Parkway #300 Cottonwood Heights, UT 84121. ©2024 Social Finance, LLC. All rights reserved. Information as of November 2024 and is subject to change.


Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOBD0723003

Human resources and benefits managers have perhaps never been more put to the test than during the height of the Covid-19 pandemic.

The pandemic forced employers to quickly learn how to manage a remote workforce while trying to fill immediate needs for short-term benefits, such as emergency savings and child and elderly care support. At the same time, economic instability and the racial justice crisis added to employees’ concerns and stresses.

Now, you may still be in the sorting-out stage, trying to figure out how best to take what you learned in the crisis and apply it to long-term policies and tactics that will continue to support employees moving forward.

Here’s a look at three key strategies HR pros may want to consider, as workers continue to face uncertainties in the economy and the world, and in the event of any future crises.

1. Make Sure Communications Are Honest and Accurate — and That They Reach Everyone

You’ve likely hit some obstacles as you tried to communicate Covid-oriented policies and protocols among your far-flung workers. In the process, you may have found strategies that work for you and others that don’t. Add to those lessons the following tips to help you move forward.

Be Honest

Research shows employees engage more if they think company communications are honest. That means it’s OK to tell employees management is still looking into a change or isn’t sure exactly when a new policy will be implemented. In uncertain times, it’s better to keep in touch. Employees are looking to you for leadership, but they also want to be in on the process when changes are taking place. What’s more, giving employees honest updates can avoid the need for damage control later.

Be the Voice of Reason and Compassion

Your employees are likely overloaded with news and information, some of which may be contradictory and confusing. It’s important that your communications stay on top of breaking news and add a clear, helpful, and understanding voice to the discussion when events impact the company, the employees, and benefits.

Recommended: How Financial and Mental Health Can Collide With Work

Take a Multi-Channel Approach

While email is generally still the most common way to communicate with employees, you also want to use mobile and social media to help ensure that all employees see vital communications no matter where they are or what their work situation may be. This will be, literally, reaching out to your employees where they are.

Recommended: Benefits of Working From Home for Employees

2. Review Your Voluntary Benefits

In times of uncertainty, employees may look to their employer for a shoulder to lean on. Many HR professionals have recognized this through the Covid-19 crisis by offering a variety of flexible benefits that can help employees solve their short-term financial challenges today and assist them in building a stronger future.

Research shows that more employers are offering voluntary benefits across a wide spectrum of needs. According to a 2022 survey by the professional services firm Aon, the number of employers offering new or additional voluntary benefits increased 41% from 2021 through 2022.

The fastest-growing benefits employees are offering include supplemental health insurance policies (e.g., critical illness, accident, and hospital indemnity), life insurance, student loan assistance programs, identity theft protection, legal benefits, pet care, and auto/home protections.

Whatever combination of flexible or voluntary benefits you may be considering, you’ll want to be sure it fits your workers’ demographics and pressing needs. A variety of well-chosen benefits can help your employees face their specific challenges while also reducing stress and calming nerves during any period of uncertainty.

Recommended: 4 Ways HR Pros Can Better Support Financial Wellness

3. Help Employees Balance Short-Term and Long-Term Financial Well-Being

In uncertain times a flexible financial well-being approach that includes the short-term benefits employees need to make it through is more important than ever. That’s why so many employers have introduced the types of benefits that employees feel are most relevant to their current financial concerns. Those may include emergency savings programs, homeownership benefits, and student loan repayment programs, to name just a few.

But this doesn’t mean that the importance of retirement savings and other long-term benefits should be diminished. Far from it. The security of knowing long-term retirement savings is in place can help add to employees’ overall financial well-being, especially during tumultuous times. Through effective communication and education programs, HR professionals can help employees balance short-term and long-term financial needs and goals.

It’s essential in times like these to try to help employees feel — and be — secure. These strategies may help you and your company continue to improve financial well-being during both calm and more tumultuous times.

Products available from SoFi on the Dashboard may vary depending on your employer preferences.

Advisory tools and services are offered through SoFi Wealth LLC, an SEC-registered investment adviser. 234 1st Street San Francisco, CA 94105.

SoFi Student Loan Refinance Loans, Personal Loans, Private Student Loans, and Mortgage Loans are originated through SoFi Bank, N.A., NMLS #696891 (Member FDIC), (www.nmlsconsumeraccess.org ). The 529 Savings and Selection Tool is provided by SoFi Wealth LLC, an SEC-registered investment adviser. For additional product-specific legal and licensing information, see SoFi.com/legal. 2750 E. Cottonwood Parkway #300 Cottonwood Heights, UT 84121. ©2024 Social Finance, LLC. All rights reserved. Information as of November 2024 and is subject to change.


Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOBD0623007

Mental health and financial health typically go hand in hand. For years, studies have shown a link between stress over finances and an increase in mental health problems, including depression, anxiety, and substance abuse. And on the flip side of the coin, people with mental illnesses are more likely to have financial problems.

Recent research also supports this important connection. In SoFi at Work’s The Future of Workplace Financial Well-Being 2022 survey (which included 800 HR leaders and 800 full-time employees), 75% of workers said they were stressed about financial issues. They also reported that this stress has worsened their sleep (38%), mental health (36%), physical health (27%), and ability to focus at work (23%).

Financial stress and mental health problems can lead to increased absenteeism and low productivity among your workers. As a result, it may make sense to help employees combat financial issues and mental health problems at the same time. Indeed, over the last few years, many employers have been exploring ways that financial well-being benefits and mental health benefits could work together to build the support and offer the solutions employees need to weather financial and mental stress. Here are some lessons from those efforts that might benefit you and your organization.

Recognize How Financial Well-Being Programs Can Support Mental Health in the Workplace

Financial planning, budgeting tools, debt counseling, and financial education services have become increasingly popular employer offerings in recent years. These tools can help employees become financially stable so that they can move on to long-term savings and goals. In addition, gaining control over day-to-day financial challenges can help reduce the stress and anxiety associated with financial instability.

Now may be a particularly good time to emphasize the connection between financial and mental health wellness to your workforce. According to SoFi’s survey data, 84% of employees believe their company should be responsible for their financial well-being, but only 55% feel their company is concerned about their financial wellness. What’s more, 86% said these benefits impact their desire to stay with their employer.

Offer a Choice of Flexible Financial-Contribution Programs

Personalized benefits that are relevant to individuals’ situations can be especially helpful in reducing the financial stress employees are feeling right now. Depending on an employee’s personal situation, payroll deduction emergency savings accounts, student loan repayment programs, and/or debt management tools may be tailor-made tools that can help them handle the financial stressors that may be contributing to depression, anxiety, and other mental illness.

This is a good time to take inventory and see what solutions might be missing from your financial well-being benefits. Questions to consider include:

•   Have you set up an automated emergency savings program for employees?

•   And if you have, are you sure your employees know it exists and how to participate?

•   Do you have a 401(k) matching program for employees paying off student loans?

•   Are your education and financial planning efforts aimed at all employees, not just those focused on long-term savings?

Help Employees Keep an Eye on Long-Range Goals, Too

Today’s high cost of living combined with immediate financial concerns like repaying student loans and credit card debt means that many employees are simply not saving enough for the future. In fact, SoFi’s financial wellness survey found that 47% of workers are concerned that the money they have won’t last, and only 54% said they are securing their financial future.

Despite the demand for short-term saving solutions, you may also want to help employees balance short-term and long-term goals. Even for younger employees, you don’t want to take the focus completely off retirement and college savings benefits. And for employees who are closer to retirement, maintaining savings is important, too. Helping everyone in your workforce, regardless of where they are, maintain a balance between short-term and long-range goals can be an important step to developing their overall financial well-being and lowering their stress.

The Takeaway

Human resource leaders, mental health professionals, and economists all agree that financial stress can have far-reaching consequences for your workforce, including increased mental and physical health issues and reduced engagement and productivity.

Given what we know about the connections between mental health and financial well-being, combining your mental health and financial well-being benefits to create customized packages accessible and meaningful to all employees can help ensure your workforce is ready for the challenges ahead.

Products available from SoFi on the Dashboard may vary depending on your employer preferences.

Advisory tools and services are offered through SoFi Wealth LLC, an SEC-registered investment adviser. 234 1st Street San Francisco, CA 94105.

SoFi Student Loan Refinance Loans, Personal Loans, Private Student Loans, and Mortgage Loans are originated through SoFi Bank, N.A., NMLS #696891 (Member FDIC), (www.nmlsconsumeraccess.org ). The 529 Savings and Selection Tool is provided by SoFi Wealth LLC, an SEC-registered investment adviser. For additional product-specific legal and licensing information, see SoFi.com/legal. 2750 E. Cottonwood Parkway #300 Cottonwood Heights, UT 84121. ©2024 Social Finance, LLC. All rights reserved. Information as of November 2024 and is subject to change.


Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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