Are your employees financially resilient? A new quiz can help them find out
As the coronavirus pandemic sends shockwaves through the U.S. economy and labor market, employers are making efforts to support the financial security and resiliency of their employees.
SmartPath, a financial counseling platform, has launched a free online resource called the Money Moves Quiz, which has been distributed to employees at Home Depot and Huntington Ingalls, America’s largest military shipbuilding company, among others.
“You're not going to solve people's financial problems overnight,” says Alok Deshpande, co-founder and CEO of SmartPath. “But what you can do is give them a roadmap that is clear and actionable, with things that they can do and steps they can take to feel like they're making progress. And if you can do that you will reduce stress significantly. It’s about giving people some peace of mind during a time that is filled with uncertainty and stress.”
Through the quiz, employees can learn how to build confidence and a secure financial plan by answering 15 questions about their current situation. The questions include things like whether they have emergency savings or own a home, if their employment status has recently changed, or if they’ve had a pay cut. Based on the answers, SmartPath will provide a clear financial plan tailored to the employee’s needs.
“We wanted to be able to help people be strategic about how they manage [their money] through this cycle,” Deshpande says.
Nearly 70% of workers are stressed about their finances, with many worrying about their personal finances at work, according to research from financial firm John Hancock. The coronavirus has exacerbated these stressors for many, and 27% of people have dipped into their retirement savings, or plan to use them as a source of income, to cover expenses, according to a Bankrate survey.
In addition to financial pressure, COVID-19 has also led to confusion over the best tactics for managing money. The CARES Act, passed in March, allows some people to temporarily halt their monthly student loan payments, or withdraw up to $100,000 from their retirement savings accounts by December 31, 2020 without incurring early withdrawal penalties, among other things. It also allows certain changes to employer-sponsored retirement plans to help people impacted by the coronavirus.
Deshpande says the quiz can help benefit teams not only address questions over these changes and options, but help their employees think critically about their spending and savings needs.
“In the CARES Act, there were changes made to whether people could take out a retirement plan loan or they could take a COVID-19 distribution,” he says. “That bogged down benefits groups because employees are asking whether they should take out the money or not. We've seen a number of major employers in the country release this quiz to their employees to help them think about their decisions and options.”
Employers need to take responsibility for supporting their employees, helping them to weather these financial challenges, Deshpande says.
“It’s about empathizing that there is going to be financial carnage in people's lives,” he says. “An employee may not get a change in job status or reduced pay, but in that household, the spouse could have lost their job, or kids moved back home from college, or they may be caring for elderly or have experienced loss of life. There's so many things that impact people's wallets through this period of time.”