Budgeting For The Unbudgetable
Budgeting is like eating vegetables. It’s good for you, but you’d rather not have to do it. However, budgeting - or cash flow management, if you prefer - is the cornerstone of financial wellness. Having a Financial Wellness program is moot if you don’t focus on cash flow management. Let’s discuss some best practices for implementing these types of programs in the workplace.
Privacy Is An Issue
Let’s face it; anything associated with money is generally private. Health wellness programs tend to be easier to manage: HIPAA covered health surveys, checklists/completion of doctor visits, pedometer competitions, and so on. But how do you pull that off with financial wellness? It’s not like employees want to disclose how much debt they have or whether they’re living paycheck to paycheck with their coworkers, boss, or HR.
Keep confidentiality top of mind - you want to make sure the program you’re working with doesn’t report any individual’s financial information back to HR, and you also don’t want employees to think that it does, either. You also want to make sure any tools used during a seminar or webinar allow employees to remain anonymous because this is how you get more interaction and feedback. At Retirement Planology, we use Zoom; we use the chat for direct messaging to the facilitators, as well as the poll feature to get information from the entire audience.
Messaging might also be an issue. Some plan sponsors may be hesitant to offer any kind of cash flow management resource to employees for fear of sending the wrong message. “Sorry we don’t pay you enough, so here’s some help on managing your cash flow!” In this case it might be best to have your retirement plan advisor send out any communications regarding these resources. That way it won’t seem like the HR department is targeting anybody. Support for the programming from HR is key, however.
Budgeting Requires Energy
Managing your finances is not a one and done; it requires ongoing maintenance. Anything that requires action also requires accountability. A successful budgeting/cash flow management program will have that accountability built in. There are a couple of ways you can do this:
Financial coach/advisor - This works especially well, since meeting with someone one-on-one is almost always better than getting financial advice from a bot.
Points for activities such as attending financial wellness webinars, etc. - Make it easy for employees to be accountable for their financial wellness, and make it fun, if you can.
Surveys afterward about the level of impact and the actions they’re taking - It’s easy to ask questions like, on a scale of 1-10 how valuable was this content? What actions are you going to take based on this course/article/webinar? Would you like someone to follow up with you to make sure you take that action and receive more wellness points if you carry it out?
There Is No One Right Way to Budget
There are lots of different ways to budget and manage your cash flow, but some ways are far better than others. Having yet another platform that the employee has to log into and learn doesn’t always work well for them. It’s also important to evaluate your providers’ tools to make sure that what they’re offering isn't just a robot that spits out a budget based on a few inputs. Why? Because it may make suggestions that are so far out of normal habits and spending values that the employee will quit before they start.
Our pick for the worst software designs a budget for you based on your past spending. It doesn’t ask you to input how much you make! This results in a brand new budget…designed to spend more than your paycheck! (Don’t get me started on the robots.)
Our favorite budgeting software is You Need A Budget - and hey employers, they now have a corporate wellness option, as well!
Education Does Not Lead To Action
We know this from 401k-land: just because an employee has financial information doesn’t mean they’ll do anything with it. You, as a plan sponsor, will have to offer encouragement and accountability for your employees to act, such as the above-mentioned points system.
According to our friends at John Hancock, over 70% of employees have troubles related to money. Before you roll out a fancy financial wellness program with lots of bells and whistles, remember that having control over your cash flow is the foundation that the entire financial house will be built upon. If you’re going to choose one thing to educate your employees on when it comes to finances, managing their cash flow/budgeting should be it. Full stop.
Need a financial wellness program or cash flow management programming for your employees? Reach out to us today.