ATLANTA, April 19, 2021 /PRNewswire/ -- National Stress Awareness Month has taken on new significance this April as our world struggles to recover from a year that left many reeling from hardships in all areas of life. One constant stress in any year is worries over finances, from saving enough for retirement to covering unexpected expenses. With over 37% of Americans living paycheck-to-paycheck and 40% having less than $300 in savings1, financial stress is high. Purchasing Power, a voluntary benefit fintech company that offers the leading employee purchase program through the convenience of payroll deductions, is sharing tools that employers can offer in the workplace to help.
"Voluntary benefits that help address employees' short-term financial needs and allow them to manage unexpected expenses without resorting to high-cost debt are growing trends in the workplace," says Trey Loughran, CEO of Purchasing Power. "These include employee purchase programs, medical deductible financing, low interest installment loans and student loan debt repayment support, as well as instant pay benefits, payroll advances and automated, payroll-deducted savings accounts."
Following are two of the most common ways voluntary benefits—including those listed above—can help reduce employee financial stress:
Provide alternatives to high-interest credit cards. Paying cash or using a low-interest credit card is the ideal way to buy what we need, but that's not always a reality for many American workers who have sub-prime credit. When they encounter an unexpected expense, they need an option that doesn't have sky-high interest rates that easily sink borrowers into an inescapable debt cycle, wreaking havoc on their credit score.
Offer alternatives to borrowing from their 401(k). A retirement savings plan is an essential part of an employee's future financial security, replacing pensions as the dominant form of retirement income. However, many employees have been borrowing from their 401(k) prior to retirement to cover mostly short-term needs such as vehicle repair/replacement, medical costs, replacing/upgrading major home appliances and home repairs. In most cases, employees are borrowing from their 401(k) because they didn't have the money in a savings account or emergency funds to use. Often, these 'loans' end up actually being withdrawals that are never replaced.
"Employers may assume that only employees on the low end of the pay scale are most likely to be financially stressed. But this stress often occurs simply because 'life happens' and there are unexpected expenses as a result. Many workers carry student loan debt or are dealing with someone in their household affected by pandemic layoffs and furloughs. Whatever the case, employers are recognizing the opportunities voluntary benefits bring to help improve the quality of life for their hardworking employees," adds Loughran.
About Purchasing Power, LLC Purchasing Power, LLC, is an Atlanta-based voluntary benefit company celebrating 20 years as the leading employee purchase program for consumer products and services through payroll deduction. Helping employees achieve financial flexibility, Purchasing Power is available to millions of people through large companies including Fortune 500s, associations and government agencies. Purchasing Power is a Flexpoint Ford, LLC company. For more information, visit www.corp.purchasingpower.com.