We work closely with several providers to create benefits programs that are as unique as each employer. One of our trusted partners is Rachel Fox of Sunny Day Fund. She's here to share why employers should consider the value of savings accounts for their employees (especially Emergency Savings Accounts).
My mother-in-law only uses cash for day-to-day expenses. She knows—within about 50 cents—what her grocery bill will be before she reaches the checkout lane. She clips coupons, and she gets frustrated when a new clerk doesn’t know how to count back change. She still stashes her money in a Bible under the bed.
My own parents had different relationships with money. My father was penny-wise but pound-foolish, while my whimsical mother didn’t see what all the fuss was about. If she had money, she spent it. If she didn’t, she made do. And that was that.
But despite their different approaches, there was always money in savings.
Savings used to be how we paid for things. Remember the old Christmas Clubs? Employers would withhold a little from each paycheck, and come December; employees got a lump sum for guilt-free, pre-budgeted holiday shopping. It was simple and effective.
Now? We charge it. Credit cards have become the fast food of financial services—a once-occasional indulgence turned into a daily dependency that quietly chips away at our financial health. I play along and put most purchases on my credit card for convenience and cashback perks. But here’s the catch: this only works in my favor if I can pay off the balance every month.
And that’s the problem:
💳 We’ve incentivized spending.
💰 We haven’t incentivized saving.
Especially for younger generations, where money is often conceptual rather than tangible, cashback offers and spending incentives can drive unhealthy financial habits. (Because that 0.42% APY savings account interest rate can’t hold a candle to 5% cash back!) The financial system makes billions from workforce debt and dependency. It’s not all that different from physical health: Do we keep prescribing medication for chronic issues, or do we take steps to help people improve their health and reduce their reliance on costly treatments?
The same goes for finances. Instead of just offering financial “first aid” when employees are in crisis, we need to build financial levees that prevent future disasters. Here’s how:
Automate savings from the paycheck
The paycheck is the wellspring of every employee’s income. By automating savings directly from payroll, we make saving a regular, effortless habit. When money flows straight into a savings account before hitting a checking account, it’s far less tempting to spend.
We’ve seen it with 401(k)s: if employees don’t save through their paycheck, they’re unlikely to do it as effectively or consistently on their own. The same goes for liquid savings.
Employers can contribute to emergency savings accounts (ESAs) as an employee benefit. Just like with retirement, the free money boost can help employees reach their goals faster. When workers see their emergency fund grow with employer support, it becomes a more powerful motivator.
Too many companies rely on reactionary financial resources—401(k) loans, internal personal loans, or pay advances—to help employees in crisis. While these tools help to put out the fire, what’s preventing the next fire in 6 months?
As an ESA Recordkeeper, I spend my days helping companies bring payroll-deducted, employer-matched Emergency Savings Accounts to workers with the greatest financial precarity.
Lindsay has been a faithful and cherished supporter of this. I’m proud to be part of the comprehensive benefit strategies she develops to support employees at every level.
If you’re looking for fresh, effective new benefit ideas, let’s bring back the old familiar one: savings. It worked then, and it works now.
Content provided by Rachel Fox of Sunny Day Fund
Photo by parkpoomy