There’s financial stress, financial wellness, financial literacy, financial education, financial planning…so what in the world is financial flexibility?
Let’s start by looking at it this way. Our economy recovered from the great recession and the 4% unemployment rate is the lowest it has been in years, yet employees still have a great deal of financial stress. The main reason is that most of them are living paycheck-to-paycheck. They’re not likely to win the lottery and their pay isn’t going to up significantly, so they need their money to do more. They need financial flexibility.
Just what is financial flexibility? Financial flexibility is the ability to manage expenses and make everyday life affordable. It is the financial stage beyond living paycheck-to-paycheck. It means being smart about how we use our monthly income and finding ways to make our money do more so that we are able to pay bills on time, take a vacation, have an emergency fund for unexpected expenses and perhaps splurge on something small occasionally. Financial flexibility is the stage between living paycheck-to-paycheck and financial security (a level few employees ever achieve).
Being financially flexible means doing more with our money by following a monthly budget, being wise shoppers and taking advantage of employer-offered financial wellness tools and voluntary benefits such as financial counseling, student loan refinancing programs and employee purchase programs.
Financial education benefits can help employees with budgeting and debt reduction needs. But employers also should adopt voluntary benefits that provide employees the opportunity to have some financial flexibility. Among these are:
• Low interest installment loans and credit;
• Student loan repayment benefit programs.
• Automated savings programs that encourage employees to save money each month from their paycheck;
• Bill payment programs that empower employees with debt paydown strategies and the ability to make recurring bill payments on-time each month through payroll deduction; and
• Employee purchase programs that allow workers to purchase consumer products and services through payroll deduction when they are unable or prefer not to use cash or credit.
Financial security isn’t the American Dream for employees because having an endless bank account just isn’t going to happen. Financial flexibility is the new normal. It’s the new version of the traditional American Dream. Employers have a role in helping their employees achieve this type of financial flexibility.