How Employers Can Help Employees Increase Their Financial Wellness
Employers play a vital role in supporting their employees' financial wellness. They can offer educational resources such as financial literacy workshops, provide access to retirement planning tools, and facilitate employee assistance programs that address personal finance challenges. Additionally, employers can implement benefits like 401(k) matching, flexible spending accounts, and health savings accounts, which encourage employees to save and manage their finances more effectively.
Open communication about available benefits and regular financial wellness check-ins can help employees make informed decisions. By fostering a supportive environment and offering practical tools, employers empower their workforce to achieve greater financial stability and confidence.
A key is understanding the current health of your finances starts with having a solid plan in place, but it depends on following the plan to help you stay on track and continue working toward your financial goals. That is where a financial wellness check can be useful. It can help you make sure you are hitting the right milestones in your plan — and help you confirm that your plan is working for you.
Where to start? Here are six questions from Wells Fargo Advisors that can help set up your financial wellness check.
Are you adding to your investment accounts on a regular schedule?
Saving often and early is rule No. 1 because of the power of compounding. When you leave any investment gains in your account rather than taking them out, those gains can start earning returns as well.
Taking full advantage of your employer’s retirement plan — typically a 401(k) can be a good place to start. That includes contributing enough to qualify for any potential company match. If the company is going to match you up to a certain percentage, consider putting at least the percentage that your company will match. Those nearing retirement may want to explore “catch-up” contributions that let you add more to certain retirement accounts.
Are your estate planning documents up to date?
Estate planning documents should generally include a will, revocable trust, health care power of attorney (POA), durable POA for financial matters, and a list of your accounts, their respective contacts, and account access information. You might also consider including a net worth statement, life insurance policies, property deeds, and a list of assets for your children.
Talking to loved ones can be an essential part of estate planning. Having those discussions, writing down your wishes, and then formalizing those wishes through official documents can be key.
Do you have an emergency fund?
Unplanned expenses, health events, or loss of income can disrupt the best of plans. A good rule of thumb is to have six months’ worth of expenses in an emergency fund.
You might need your emergency fund even when an event is covered by an insurance policy. If a natural disaster such as a hurricane does significant property damage, it takes a while for the insurance money to become available. And it could take a while for your employer to reopen so you can resume working.
Do you have a plan for paying for your child’s college education?
If you’re thinking about paying for your child’s or grandchild’s college education, consider starting to save soon after they are born. Think about making college savings a part of your monthly budget just like your retirement savings. 529 plans and other college savings vehicles are worth considering. Please consider the investment objectives, risks, charges, and expenses carefully before investing in a 529 savings plan.
Are you tax-savvy?
With accounts such as 401(k)s and Traditional IRAs, money has the potential to grow tax-deferred. That means you pay taxes on the funds when you withdraw them during retirement. But with choices such as Roth IRAs or Roth 401(k)s, you pay taxes on the money at the start but then do not pay taxes when you take qualified withdrawals. (Other specialized accounts, such as Health Savings Accounts and Flexible Spending Accounts, may also provide tax advantages.)
It really boils down to not putting all your eggs in one tax basket. Putting most of your wealth in tax-deferred savings accounts means when you withdraw your money, you may potentially incur a large tax bill. Diversification with taxes in mind can give you options to help you manage the tax efficiency of your withdrawals.
Are you getting advice from a professional advisor on a regular basis?
Having a financial wellness checkup with a financial advisor and other professionals is like getting health input from a doctor. Your financial professionals can evaluate your situation by taking measurements on a regular basis or whenever a significant life event happens, such as a job change, marriage, or divorce. This can help determine where you stand and what actions to consider. It is like your financial professionals are getting all the necessary information they need and then prescribing what may help improve your financial well-being.
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