How Your Employees Can Live Their Best Financial Lives in 2021
It’s now almost a cliché to say 2020 has been a doozy, and it is still the case. We are still dealing with daily changes, life changes, and feeling anxious. Health is a big worry. Next to that, finances are what people -- including your employees -- are worried and thinking about.
What we buy and how we buy it have drastically changed over the last couple of months. Even for those who are employed, personal finances look different now: perhaps their spouse has lost their job or taken a pay cut; perhaps an adult child is helping their parents out; parents are also spending more on groceries or school supplies for their kids.
Here are 3 ways your employees can plan their finances for 2021.
Revisit their goals The world has changed -- it’s okay if your goals have too. Many of our clients have moved out of New York to a suburb or the country, from East to West, to have more space, more access to nature, and to be closer to family. (You don’t need this -- it doesn’t make a good transition)
Have you taken on more debt and want to pay it off? Maybe your goal is as simple as completing 2-3 no-spend days per month. Take some time to think about what you want to accomplish, what you want your life to look like in 2021. Remember: your goals should reflect what is important to you and what you want to achieve -- not what you think you should have as goals.
Setting new or additional goals can look like any of the following:
Focus on your Health
Paying down debt
Saving for an epic 2022 vacation
Save for a home
Investing
Retirement
Eliminating expensive spending habits
Sticking to a budget
2. Create an emergency fund When emergencies happen, your whole life can be put on hold. You have a death in the family, your car gets totaled, or you find out quite unexpectedly that you’re getting let go. These are considered emergencies because they must be dealt with right now and the severity can consume all of your attention. Not only that, it can also cost you a lot of money.
Typically, it’s a good idea to have three to six months of expenses set aside for emergencies. To get started saving for an emergency fund, open a separate high-yield savings account. Think of an online bank that gets higher APY, such as Ally Bank, and one that you can’t access as easily as your primary bank account. You don’t want to touch this money unless there’s a real emergency.
Next, you want to calculate how much you need in your emergency fund. What are your monthly living expenses? Think: food, rent, insurance, transportation. Know that number and then multiply it by three or six to get your desired emergency fund number.
Don’t panic! It’s a lot but you will grow it over time. Even if you feel like you can’t save a lot, save $20. It all adds up.
To begin, look at how much you can afford to set aside each month and then set up automatic withdrawals from your checking to your savings. Choosing a date right after pay day can help, and automating the withdrawal can easily make sure you save.
3. Set a budget Hearing the word budget is about as fun as hearing the words “diet” or “root canal.” And yet a budget is one of the necessary keys to financial health. What is the point of setting goals for ourselves if we don’t know if they are achievable or not? The only way we can truly determine the attainability of our goals is by setting a budget.
Budgets get a bad rap because people think of them as constricting spreadsheets without real-world applications. We find that it is people without financial goals who have the most issues with the budget process. If you don’t have a goal, then of course you would hate a budget. After all, what are you working toward? Why put in so much energy?
Most of the time when people start to budget, they actually feel less restricted because all of the sudden, their spending makes sense. Many of our clients are on budgets and they don’t even know it. They are on budgets, because we have set goals for each month, quarter and year and the only way we can achieve those goals is staying within certain parameters on their spending and saving.
There are a number of behavioral and mindset shifts your employees can make starting in December or early January so they can plan their finances for 2021; this could be their more financially organized year yet!
If you might be interested in offering your employees our webinar, Financial Goal-Setting in 2021, please contact our Financial Wellness Consultant here: Enterprise@fingyms.com or visit our Corporate Partnerships page here.
The Financial Gym is a national, personal financial services company with a fitness-inspired approach. Certified Financial Trainers™ work with employees via corporate partnerships, one-on-one, virtually and in physical locations across the country.
Employees learn financial literacy; specifically, they learn how to be accountable for their money; how to make smarter, and more strategic decisions about their finances, which alleviates financial anxiety and enables a greater focus on their work.
Interested in bringing financial literacy education to your employees?
Book a call with our Employee Financial Wellness Expert. From webinars to Trainer-on-Demand to personal coaching, we offer a variety of programs for every budget.