Financial shocks impact 60% of Americans each year and more than half struggle to make ends meet six months after the event. For financially vulnerable frontline employees challenged by low credit scores, costly debt, and no savings, just one money emergency can start a downward financial spiral that lasts years.
Without access to real solutions for financial emergencies, financially ill employees become more sick- and their employers pay a price for it. Nearly 70% of employees connect with Brightside for help with some type of emergency money need and 30% say interruptions to work will occur if their emergency is not addressed and resolved.
Employers cannot expect financial wellness benefits to help employees solve a money emergency; it’s akin to offering a step challenge program to treat an employee’s broken leg.
Here are four questions you can apply to your employee financial benefits to assess whether they can help employees secure solutions for their emergency money needs, while supporting their their financial health.
1. Do your benefits support the full spectrum of money emergencies?
Emergency money needs run the gamut from an unexpected car repair or dental issue to not having cash to pay bills on time, to eviction, homelessness, and food insecurity.
Some money emergencies can be resolved by connecting the employee with a small amount before their next paycheck; others may require affordable and fast access to a few thousand dollars. In severe situations such as eviction and homelessness, employees need support that extends beyond financial resources, including:
- Legal aid
- Connections to local resources for safe temporary shelter
- Finding and funding a new place to live
- Understanding how to prioritize other bills
- Mental health support from an EAP or similar employer benefit
Regardless of the money emergency, Brightside Financial Assistants work with employees to help them identify and understand their available options; feel supported in their decision so it’s easy to take action; and build hope that their situation can improve.
2. Can employees easily access solutions for emergency money?
Employees facing money emergencies need personalized, human-led support and real solutions that do not further harm their financial health – something that neither financial wellness solutions nor earned wage access can do for a financially ill employee.
For example, employees that connect with Brightside Financial Care for help with a money emergency have several options, including:
- Access to affordable paycheck-linked loans, even with a low credit score
- No-fee Cash Advance feature to access $100 of emergency money from their next paycheck before payday
- Personalized support from a Brightside Financial Assistant who will help the employee do the legwork, including negotiating and identifying affordable options, so employees can quickly address their emergency
- Help connecting with resources that offset the costs of shelter, food, utilities, or childcare when applicable
There are many different options based on the employee’s unique situation, but all are real solutions that address emergency money needs and support their financial health.
3. Do financially ill employees benefit from your emergency money options?
Supporting employees’ money emergencies requires understanding their financial reality and barriers. For example, lower-income frontline employees are more likely than the rest of the workforce to have low credit scores and high debt levels relative to income. This makes them unlikely to qualify for affordable loans through a bank, credit union, or private lender.
Employee benefits that give employees access to affordable loans that base lending decisions based on factors such as employment tenure and borrowing amount (and less focus on credit score), help them access the emergency money they need for emergencies. The loans should also include guardrails that protect employees’ financial health, including the ability to automatically repay funds from each paycheck, in an amount that’s determined based on the employee’s unique financial situation.
In addition, your emergency money options can and should include features that make it easy for employees to build an emergency safety net automatically from each paycheck (even in small amounts).
Though workplace emergency savings accounts have become popular among employers who aspire to improve frontline financial health, don’t assume employees have the means or knowledge to use or build the account in a way that will change their financial lives, especially if they tap into the funds.
An emergency savings fund is critical to reducing financial vulnerability but does not address root causes. That means it isn’t enough to treat financial illness in a way that measurably improves employee financial health.
4. Does your emergency money user experience remove shame and stigma?
Your financial benefits should empower employees to connect with a compassionate, non-judgmental partner who can help them deal with their money emergency while keeping their identity confidential from anyone in your company. Proactively and consistently communicate to employees about their financial benefits and the needs they can help with, so they know exactly where to turn if they have an emergency.
Hear Tom Spann, Brightside CEO and co-founder, explain why helping financially ill employees handle financial shocks requires an approach financial wellness benefits can’t deliver in the short clip below. To watch the full on-demand webinar “Do You Need a Frontline Financial Health Strategy?” featuring experts from Amazon and Financial Health Network, click here.
