Investment planners and employers are effective in getting the message across to employees to invest, save and plan for retirement. However a plan for debt management is usually not included in a typical benefits plan provided to employees. When we talk about risk management we mean how a person invests in the stock market and not how one spends using a credit card. Credit card debt can take a huge bite out of an employee’s ability to save for retirement and the financial stress that comes with debt may interfere with work productivity.
A good financial plan would indeed include saving for retirement and, if possible, a reservoir for future investments. However for some it is not in the cards until debt becomes a non-issue.
When an employee is stressed about making credit card payments, they are not concentrating on saving for retirement or looking for investment opportunities. Seems to me that the investment advisers should start concentrating on how a person can manage debt before they can advise on anything else.
A person cannot put 10% of their salary towards an RRSP when they need to put 15% towards their debt. They will get nowhere if debt competes with future investment.
These days the size of an employee’s personal debt is increasing faster than their retirement savings. Many are living paycheque to paycheque with insufficient emergency saving funds making the issue of debt management even more critical than any profit from future investment plans.
Including a debt management plan in an employee benefit package would be optimal for a company’s success. Workers who are financially stressed may be distracted and depressed at work. Productivity may be affected including increased employee absenteeism.
Employers who recognize this are inviting professional debt counselors into their offices to counsel their employees on good personal finance management. Services such as all group discussion periods as well as confidential one-on-one consultations with employees are available by some debt management firms. Questions like, “How much debt do you carry?”, “what is your household income?” and “Do you have a plan to get out of debt?” help employees understand their financial situation. Some people do not realize how much debt they are in or have proper guidance to make good financial decisions. As a result, they sink further into debt until they find themselves too deep to find a way out. Providing a basic debt management plan will insure an employee gets the help they need to remove financial distress.
A company’s success is dependent upon its employees. So it stands to reason that an employer will be productive by investing in his or her staff. Stable financial wellness is a big part of being a gratified and productive employee within the workplace. Recruitment and retention are the rewards to employers when they have happy employees. It’s a WIN – WIN for both sides.
For more information about including a debt management program within a company’s EAP program, see OCCA Consumer Debt Relief’s corporate services/EAP program..
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