COMP NEWS – The financial cost of rising inflation has helped create a new job benefit for many workers – emergency savings accounts whose contributions are matched by employers.

A growing number of American workers are getting access to a new job benefit: help with saving for unexpected expenses.

The financial stress on workers brought about by both the pandemic and rising inflation, as well as employers’ need to attract employees in a competitive job market, is making rainy-day savings options a hot job perk.

Starbucks is the latest employer to announce that it is offering an emergency savings option for workers. And companies including ADP, the big payroll processor, and start-ups like SecureSave, which the personal finance celebrity Suze Orman co-founded, are offering employers access to easy-to-use tools to help workers save.

Employees without access to a financial cushion for unexpected costs are less likely to participate in the economy. The ramifications of helping workers with emergency savings funds go beyond individual financial security – they can bolster employee participation in the market economy.

Experts have come to consider saving for emergencies different from saving for long-term goals, like a down payment on a house or retirement, because rainy-day funds may be used and replenished repeatedly. Workers need an easily accessible cushion to navigate near-term financial setbacks, Mr. Maynard said. Those include not just large shocks like a broken furnace or a job loss but also smaller shortfalls, like a car repair or even more cash than was anticipated at the gas pump.

Yet nearly a quarter of consumers have no savings set aside for emergencies, according to the Consumer Financial Protection Bureau. That can drag people into debt through credit card bills or riskier alternative sources like payday loans. Or it can push consumers to take early withdrawals from retirement accounts, risking their long-term financial security.

One study suggested that employers who helped their workers with long-term savings programs could nearly triple employees’ net savings.

Commonwealth recently conducted a study with ADP to enhance the emergency savings features of the company’s Wisely payment card and app, which some employers use as an alternative to paychecks. Adding features like multiple “envelopes” for workers to use for savings, among other steps, helped to nearly triple employees’ net savings, Commonwealth reported.

To read about how emergency savings options can increase employee retention, click here.

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