Financial stress is on the rise and there’s a disconnect between employees and employers
47% of employees said building an emergency savings fund is now a top priority.
Financial stress is on the rise, and there’s a large disconnect between what employees need and what their organizations offer.
A new study by SoFi found that 86% of employees feel increasingly stressed about their finances, with 60% worried about inflation and the rising cost of goods. As employees approach retirement age their financial confidence declines, according to the study.
However, employees of all ages share concerns of saving for retirement and a lack of cash reserves. The study found that nearly 2 out of 3 employees feel unprepared to handle a major unexpected expense, such as car repairs. Additionally, 40% of employees said they are stressed about not having enough money for a major purchase, such as a car or wedding.
The study found that – perhaps in response to economic uncertainty – employees’ financial goals are shifting, with many focused on short-term objectives rather than long-term planning. For example, 47% of employees said building an emergency savings fund is now a top priority – nearly double from SoFi’s previous report.
These shifts in financial priorities might have negative impacts down the road. The study found that 37% of employees are taking on more credit card debt and 30% are getting loans from family or friends. Another 23% have cashed out investments and 1 in 5 say they have borrowed or withdrawn from retirement savings.
As employees priorities shift, employers have an opportunity to help meet their needs. Twice as many employees say they want to improve their financial literacy and knowledge from previous research, according to the study. While 70% of companies already provide financial wellbeing benefits, there’s still room for improvement.
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The study suggests that employers look to fill financial gaps by offering emergency savings plans, student loan assistance and financial advisors. Many organizations are working to meet their employees’ financial needs in 2024. The study found that 60% of companies plan to increase their budget for financial wellbeing benefits in 2024.