Why your financial wellness benefits need to cover payroll deductions

With the state of the economy being what it is, it's important to employees that they know where their money is going and why. The right initiatives from leadership can help.    

Eighty percent of workers say they monitor their bank accounts closely on payday and nearly half check their paystubs weekly, according to a recent survey from global HR and payroll platform Deel. Yet, almost a third are confused about their deductions, with more employees feeling confident about how much they're paying for their streaming subscriptions than they do toward federal taxes, health insurance premiums and retirement contributions.

"It's a really complex process from the beginning," says Jessica Pillow, the global head of total rewards at Deel. "There are so many different tax schemes, deductions, numbers and codes on paychecks that make sense for the person processing them, but they may not make sense to the employees reading them."

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Despite these challenges, employees are still doing their best to stay on top of their paychecks. Of those who review their paystubs, 63% are looking for inaccuracies or mistakes every pay period. And while more than a third of employees pick up on payroll discrepancies, a lack of education around the financial breakdown of their compensation is something benefit leaders should be working to address.  

"Fostering financial literacy at work is so important," Pillow says. "Financial stress is one the leading causes of employee stress in the U.S. If you're adding a complicated payroll process], it can impact your workers' productivity." 

Keep it simple

Boosting financial education efforts to include payroll information doesn't have to be a heavy lift for leaders. The first and most important step is to make the language on and around paychecks as simple and readable as possible. Instead of traditional codes like "401K PRE" or "MED EE," Deel suggests leaders use terminology like "401k Pre-Tax" or "Medical Health Deduction — Eligible Employee Only." That way, employees can better understand exactly where their money is going faster. 

In addition, leaders can add a payslip literacy curriculum to any financial literacy programs they already have in place to teach employees how to understand their net income, track deductions and plan for benefits changes. Benefit leaders could also create a "How To Read Your Paycheck" guide and host payroll-specific office hours to further enforce and support the strategies employees are learning. 

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"Think about it from an end user perspective — how can you make things really simple and clear to people?" Pillow says. "We're all busy; we've all got personal and professional lives. Make it so that employees can focus on their day jobs instead of how they're getting paid and whether it's accurate." 

Finally, none of the proposed practices and solutions are possible without first earning employees' trust. Organizations should be talking openly and transparently about the payroll process if they want workers to buy into the strategies and engage in them. 

"Approach it like a partnership," Pillow says. "Help employees solve the problem instead of just telling them what to do. Encourage them to ask questions — as HR and people leaders, it helps us understand what it is our workforce needs."