How emergency savings can strengthen workers’ bonds with employers

Financial adviser Suze Orman, Secure CEO Devin Miller and benefits editor Kathryn Mayer discuss emergency savings at the 2021 virtual Healthcare & Benefits Leadership Conference.

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The pandemic has put a spotlight on employee financial wellness and prompted many organizations to consider how to better support their employees’ finances. It’s an area that is resonating with the workforce, as some surveys show up to 90% of employees want their employers to do more to help them feel financially stable.

Simply offering bonuses or increasing pay isn’t enough, as true financial security is all about emotion, according to financial adviser Suze Orman. “You can never fix a financial problem with [just] money,” she said, speaking Wednesday at the 2021 virtual Health & Benefits Leadership Conference. Instead, employees need to feel confident that they have a strong savings strategy in place and that their employer is with them every step of the way.

Recent data from the National Endowment for Financial Education shows that more than 40% of employees are worried about not having enough emergency savings. In fact, it’s their top financial concern, ahead of job security and retirement savings. The survey found that 88% of employees said the pandemic has caused them financial stress.

That has created a clear mandate for employers, said Devin Miller, CEO of emergency savings fintech platform Secure. “Getting [employees] to start and maintain the habit of short-term savings is so important,” he said.

The Secure platform lets employees focus on emergency savings, with the help of their employer. Launched in the fall, the tool enables employees to make payroll deferrals, on a post-tax basis, that are funneled into a customized savings account. Employees can set savings goals, while employers are able to use the tool to offer matching bonuses. The funds can be accessed at any time and aren’t subject to the penalty that comes with borrowing against a 401(k), added Orman, a co-founder of Secure.

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“One of the reasons I’m excited about this is I want to find a way to stop employees from going to their 401(k)s and taking out a loan,” she said. “If you gave them an alternative where they could touch some money penalty-free, now that will divert them from going straight to their 401(k).”

Miller agreed, saying an emergency savings tool helps employers meet their workers where they are while supporting a complete journey toward financial wellness.

“The day has come where we need workplace savings to have more than just a single option,” he said. “You need to have variation to support different employees in different stages of life. You can’t be using your 401(k) as an emergency fund.”

Orman believes the power of this type of benefit goes far beyond the money in the bank.

When an employer recognizes the need for and value of emergency savings assistance, employees will feel validated and recognized, she said.

Employees will think, “This is my money to help me feel secure,” and that establishes an emotional bond between workers and employers. “That’s a hard emotional bond to break,” Orman added.

Also see: Why employers are thinking more about financial wellness

Given the economic realities of the pandemic, “there has never been a more perfect time” to help employees create or reestablish an emergency fund, Orman said. The challenges have served to drive change and inspire employees.

“An emergency fund offers hope,” she said. “The one word–besides secure–that I hope you want to give to all your employees is hope. Without hope, it’s like you’re asphyxiated; you can’t breathe. And sometimes, just a little action instills hope.”

All sessions will be available until June 11. Click here to view this entire session.

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Nick Otto
Nick Otto is HRE’s former senior digital editor. He is a professional communicator with more than a decade of demonstrated accomplishments in newspaper and trade publishing. He has spent the past five years covering the employee benefits space and holds a bachelor’s degree from the University of Florida.