Financial difficulties can be a huge stressor for employees during the holiday period, especially when they have added expenses such as travel, buying gifts, and keeping the pantry stocked with food. As an employer, there are ways you can help mitigate financial stress, at no cost to your company. The first step is to help employees recognize how to budget for the festive season.
Advanced Financial Planning for the Holidays
You can help employees maintain control over their finances during the holiday period in the following ways:
Identifying Financial Pain Points
Help employees to draw up a list of all their expenses during the holidays, not just the extra ones. These may include:
- Rent/mortgage
- Utility bills
- Car payments
- Credit card/loan payments
- Medical insurance
- Travel expenses
- Food expenses
- Buying gifts
Identifying their financial pain points is the first step to developing an effective budget to help your team get through the holidays and keep financial stress to a minimum.
Creating a Spending Plan
This should be done as early as possible to give employees maximum time to put it into practice. A few ideas include:
- Start saving money now: It’s never too early to start saving for the holiday period. Building savings now can help prevent employees from getting overwhelmed later.
- Cut down on daily expenses: Cutting back on non-essentials like eating out can save a little extra money.
- Use coupons wherever they’re available: These can be valuable assets when shopping for gifts.
- Start shopping early: Many items are a little cheaper before the holiday shopping period goes into full swing.
Tracking Spending
Spending can get out of hand quickly if it’s not tracked. When this happens, employees suddenly end up with a deficit without knowing how to get out of it. Encourage them to shop wisely, stay within their budget, and refer back to their plan frequently. Making cost comparisons can help them find the least expensive options. Shopping online for gifts can save money, as can avoiding the temptation to purchase overly expensive items.
- Offer financial advice: If employees are struggling with their holiday budget, they’re likely to fall victim to predatory lenders — especially if they do not have a good credit score. Of course, turning to predatory lenders will only compound their woes. Discourage your employees from turning to this type of lending, and educate them on what it looks like so they know how to avoid a cycle of debt.
Warning Signs of a Predatory Lender
Predatory lending is a process that only benefits one person: the lender. Predatory lenders offer unfair or deceptive strategies to encourage a borrower to take out a loan with unreasonable terms. Warning signs of predatory loans include:
The Offer is Too Good to Be True
Often employees are drawn to predatory loans because lenders offer promises that they cannot keep, such as:
- Mending damaged credit
- Offering cheap loans without background checks
- Helping settle debts for less than is owed
Too often, employees are attracted by these promises and then end up getting trapped in a cycle of debt due to high interest and hidden fees.
The Lender Obscures How Much the Loan Will Actually Cost
Many predatory lenders are not transparent about the full cost of the loan. They offer information that is confusing and misleading so that borrowers cannot easily see all the costs associated with the loan.
The Lender Gives a Borrower More Than They Ask For
Another predatory ploy is to offer to lend the borrower more than they originally asked for. They often then tag on lump-sum payments instead of fixed monthly payments. When the borrower is struggling to pay back the loan, predatory lenders encourage them to borrow more or rollover the loan, which gets them deeper into the debt cycle.
The Lender Asks for Access to a Borrower’s Bank Account
Many employees do not realize, but no lender has the right to demand access to their bank account. Predatory lenders convince borrowers to give them access by telling them that it’s more convenient for them to make automatic repayments. However, it allows the lender to take money from the account even if the lender doesn’t have the money. This leads to high overdraft fees and more debt.
The Lender Has a Bad Reputation:
Before employees take out a loan from any lender, the first thing they should do is to check out the company with the Better Business Bureau to see if any other borrowers have made complaints.
Why You Should Be Concerned About Employee Financial Stress
Explaining the traps and pitfalls of predatory lenders can help to educate your employees and prevent them from getting caught in an endless cycle of debt. Not only does this benefit their financial wellbeing, it also benefits their physical and mental health because it can prevent unnecessary stress. This also benefits you as an employer. You don’t want your employees to be worrying about their finances when they are at work because it has the following negative effects:
- Poor concentration and an increased risk of errors or accidents at work
- Lack of engagement that negatively impacts the quality of work
- High levels of stress that leads to health issues and increased absenteeism
- Financial stress can cause depression and anxiety, which can lead to negative feelings and irritability at work
- Financial worries increase employee isolation and decrease employee morale and company loyalty
What You Can Do to Help Employees Mitigate Financial Stress
One of the best ways you can help your employees avoid financial stress during the holiday period is to offer them financial assistance in the form of employee loans.
TrueConnect offers safe employee loans at no expense to the employer. That not only means you don’t have to lay out fees for the service, it also means you don’t have to worry about the company’s finances being affected by non-payment of employee loans.
TrueConnect enables eligible employers to offer a simple service to employees who are dealing with financial struggles during the holidays. This can be a better option than predatory loans, because with TrueConnect, there are no hidden fees. All borrowers are charged the same interest rate no matter how much they borrow. What’s more, they do not have to undergo a traditional credit check to qualify for a TrueConnect loan.
The procedure for receiving a loan is very simple:
- Employees fill out a simple online application form and are guided every step of the way.
- They will know right away if they are eligible for the loan.
- Funds are transferred to their account as soon as the next business day.
- Repayment is easy and is done by small repayments that come directly from their paycheck.
This is a strictly confidential service and along with their loan, each borrower is eligible for six free financial counseling sessions, which can help them maintain ongoing control of their finances.
Contact TrueConnect today and help your employees remain financially stress-free during the holidays.
