The average American isn’t doing too well financially. They’re treading water, but one unexpected wave could put them under. They can manage to pay their bills and get their groceries, but any additional hike in essential costs will hurt them. And if a surprise expense falls into their laps, they might not have any emergency savings to cover that cost.
You don’t want your employees to be struggling like this. You want them to be thriving. So, what can you do to make sure that your employees aren’t having this all-too-common experience? What steps can you take to make sure they have enough financial support?
Raises for Inflation
What raises did you offer employees last year? Did they match the rates of inflation? If not, that was a mistake. When a raise doesn’t match the inflation rate, you are essentially giving your employee a demotion. The bump in pay doesn’t match the bump in expenses they will inevitably face.
Unfortunately, in recent years, the rates of inflation in the country have been very high. In 2021, the annual inflation rate was a staggering 7%. In 2022, it was 6.5%. So far, this year, the inflation rate is 4.9%. This could change over the course of the upcoming months.
While a 5% raise is a workplace standard for employers that want to give their employees a boost in pay, it may not be enough. At the very least, you will want to give your employees a pay bump that helps them manage steeper expenses without straining their budgets. If you want to help them achieve more financial stability, you can try to surpass that rate. So, check the inflation calendar before you decide on raise rates.
Remember that income is a massive motivator for employee satisfaction and retention. If you don’t want your employees to conduct job searches after work hours so that they can snag a job with higher pay, make sure that you are being conscientious about their raises.
Emergency Savings Account
Your employees might not have an emergency fund sitting in a savings account. So, if an emergency expense fell into their lap, they would have to find a way to pay off the expense without the help of savings.
They might have to use a credit card to cover the expense, or they might make a withdrawal from a personal line of credit to deal with it. After all, emergencies are one of the special circumstances when to consider a line of credit as a payment method. If they don’t have a line of credit already, they might apply for one online to help them recover from this urgent problem. Their options without savings are fairly limited.
As an employer, you can help your employees avoid this stressful situation by encouraging them to make an emergency fund. Plenty of companies set up emergency savings accounts (ESAs) for their employees, using payroll deductions to contribute to the accounts. Whenever disaster strikes, an employee can withdraw from their ESA immediately.
Cover Commuting Costs
You can also ease your employee’s personal budgets by helping them tackle work-related expenses. For instance, if employees take public transit to work, they will have to pay for tickets/passes on a regular basis. As a way to help them cover this necessary expense, you can offer commuter benefits to cover the costs (or at least, a large percentage of the costs) every single month.
If commuter benefits seem out of reach for your workplace’s budget, why not embrace a hybrid work schedule where employees only commute to the office for half of the week? They could work the remainder of the week at home, where they can save money on fuel, parking or transit fees.
Your employees’ finances are a reflection of your workplace. So, give them the financial support that they need with better raises, safety nets and savings.
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