Why ESAs are non-negotiable in tough economic times

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Devin Miller
August 2, 2022

With stock market volatility, inflation, and a potential recession on the horizon, many companies are looking to make cuts—but during these uncertain times, it’s employees who suffer.  

SecureSave recently conducted a survey to better understand how people are navigating these challenging times and how emergency savings can help. Over 72% of those surveyed were negatively impacted by rising inflation and 37% said financial stress directly impacts their work.  

Higher stress levels can lead to decreased employee productivity, engagement, and retention.  

Recent research shows that the one benefit employees are asking for most is employer-sponsored emergency savings accounts (ESAs) — which enables companies to better support their staff while cutting back on budgets.  

The need for emergency savings accounts is now

Our co-founder, Suze Orman, spoke at a recent event about employee sentiment during current economic uncertainty, “What we’re finding is that credit card debt is up 21% from last year. The savings rate is back to where it was in 2013… Your employees are becoming more and more afraid they won’t have the money to pay their bills.”  

When financial times get tough, your employees suffer. They worry about their bills and futures and want to ensure they have an emergency cushion. ESAs help employees feel more secure by giving them a safety net.  

As inflation increases and costs go up, employees may need money for emergencies with cash they don’t have. Employers are likelier to see 401(k) loans and hardship withdrawals increase as personal savings levels decrease to the lowest level since the 2008 recession.

Our recent research shows that the most urgent financial priority for people right now—hands-down—is saving for emergencies, which respondents ranked higher than paying down debt and saving for retirement.

But providing an ESA benefit isn’t just about enabling better economic security and financial wellness for your employees. It’s also critical to improving their emotional wellbeing; 42% of those surveyed indicated that money concerns had a negative impact on their mental health, which can influence work performance. It only makes sense for employers to address this concern head-on.

Efficacy and cost benefit of ESAs  

Helping employees navigate financial hardships calls for a more straightforward behavioral solution than traditional financial wellness programs, which often focus on educational content.  

Tangible results are what makes ESAs so effective: employees can start saving immediately and access funds right away. Our research shows more employees would choose an ESA over any other benefit, with 43% of employees selecting ESA as their top choice, versus 15% or lower for other benefits.  

When compared to other popular benefits like a health savings account (HSA) with employer match, student loan payoff, and mental health support, emergency savings accounts with an employer match came out far ahead.  

ESAs are not only cost efficient but they can help build trust within an organization. They offer a unique alternative or supplement to other benefits that appeals to leadership and employees alike since it’s simple, low-cost, and easy to use.

Employer-sponsored ESAs are straightforward, so employees are more likely to appreciate their value and trust the benefit as a reliable solution.  

Employers can implement a highly engaging financial wellness program that’s simple, cost-effective, and directly impacts mental health and financial wellness—by launching an ESA.

How to accommodate ESAs on a tight budget  

Despite the clear benefits, the primary concern is how a program like emergency savings can fit into your existing benefits budget.  

Companies often offer benefits options that their employees don’t want or aren’t utilizing. Less than 49% of employees take advantage of their existing benefits. Recent research from SHRM found that employers continually underrate stress that comes from financial hardship—even though employees say they want more financial wellness resources.  

If you aren’t sure how to fit ESAs into your benefits offering, consider surveying your employees and seeing how they feel about the current benefits lineup—and ask them whether they’re interested in an employer-sponsored ESA.  

If you need to, you could reduce benefits that aren’t as in demand and focus instead on offering employees an impactful solution they actually want. Determine which benefits have the lowest utilization rates and eliminate those from your offerings.

With the requisite funds and support from employees, you can explore adding an employee-sponsored ESA to your offerings. If you launch this benefit, you’ll not only have happier, healthier employees, but you’ll also have higher engagement, lower turnover, increased productivity, and improved trust in your organization.  

To learn more about how you can add an employer-sponsored ESA to your benefits packages while still reducing your budget, contact SecureSave today.

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Devin Miller

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