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Employee Benefits That Cause Financial Stress

You might be hearing some buzz in the media about which employee benefits are the best. And when it comes to financial wellness, there’s way too much stress and confusion.

Here’s the problem: Most American workers are struggling to get by. At the same time, we’re seeing too many fake or inadequate benefits programs that do little or nothing to relieve the real financial stress that so many are feeling.

So what’s the latest industry take on helping employees with their money? Something awful called “financial flexibility”! What’s wrong with it? It’s messing with the way employees see their money and leading them to make a bad financial situation even worse.

Financial Flexibility Instead of Financial Wellness?

Financial flexibility might sound like a smart idea—after all, who doesn’t want to make their dollars stretch further? But it’s actually a smooth-sounding name for a rough pill to swallow. What they’re packaging as flexibility turns out to be a financial straitjacket once you try it on for size.

Here’s how the thinking goes: Since employees are having as much trouble as ever getting by, with most living paycheck to paycheck and deeply in debt, we’re seeing employee benefits pushing for what they call flexibility. They’re teaching people to drop meaningful goals like getting out of debt or building wealth. Can you imagine the way the conversation went in that marketing brainstorm?

“And we’ll call it financial flexibility! The old definition of financial wellness—setting goals to get out of debt, save for emergencies, and build wealth—is way too hard for people to accomplish these days. Let’s be flexible and give them benefits that make it easier to borrow money and not have to think so hard about finances. It’s genius!”

Yes, that’s what’s currently passing for a hot employee benefit in the market! There was even a recent industry article about the idea with this headline: “Move over financial wellness. It’s time for financial flexibility.”

Say what?

This is so bass-ackwards you want to flip the article upside down to try and make it make some sense. But no matter how you look at it, financial flexibility is a mixed-up mess.

All kinds of so-called “experts” are telling employers they can solve their workers’ money troubles with quick fixes instead of getting to the root of people’s financial issues. It’s like they’re tired of the struggle to help employees grow financially, so they’re saying we’d better just go ahead and help make employees comfortable where they are.

Folks, just making people “feel comfortable” without helping them to get better is like a dentist numbing a rotten tooth and forgetting to fix the cavity. That’s not really helping anyone! You can call it flexible, comfortable or any other marketing term you choose, but it’s not doing anything to get people moving in a healthier direction!

When you’ve met as many people as we have who made the dream happen (and we’ve met millions of them), you can never accept all this talk about impossibility. Financial flexibility is a pretty label for a hot mess.

Let’s see what kinds of benefits these jokers are promoting as the great replacement for real financial wellness so you’ll know what to avoid.

1. Payday Advances and Low-Interest Loan Programs

This one gets our blood boiling. In the name of financial flexibility, we’re seeing people offer quick fixes like loans or payday advance programs where employees can receive their pay instantly instead of waiting two weeks for a paycheck. The claim is it will help people avoid paying high interest rates at a payday loan provider or late fees for missing their bill payments.


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There’s no reason any employer should be encouraging workers to go into debt! And it’s even more crazy to do this under the name of financial wellness! Here are a few of the problems with this scheme:

  • There are still fees associated with the payday advance programs, paid either by the employer or more often by the employees themselves.
  • We don’t have to tell you that getting your pay a few days early isn’t the answer. This is a quick fix that does nothing to address the real problem, which is behavior. The answer is getting a plan for your money and having emergency savings to handle the unexpected.
  • Maybe worse than the payday advances are low-interest loans provided through your employer. Yeah, that sounds like a really good plan. Let’s make it easier for people who are already struggling with their money to go deeper and deeper into debt—not!

2. Student Loan Refinancing Programs

No personal finance topic seems to get more airtime these days than the issue of student loans. In 2017, one-fifth of those with education debt were behind on their payments.1 Asked why they are focused on student debt, 56% of employers said to retain employees, while nearly half said to help employees with stress.2

As employers work to help with this problem, many are doing more harm than good. How? By offering student loan refinancing programs. Here’s the breakdown:

  • Most student loan programs have a “refi-first” mentality that pushes borrowers to consolidate and refinance their various federal and private loans together into one single private loan.
  • This often puts the borrower into a worse situation because they lose many of the protections that the federal loans have.
  • The interest rate will also be higher than the federal loan rate. This is moving backward and can be predatory!
  • Worst of all, student loan refinancing programs do nothing to inspire real ownership of financial goals or behavior change. They give employees the false feeling that they are actually doing something to take control of their money when they are only pushing out the problem—or many times, making it worse.

On a happier note, we definitely agree that this problem’s impact on Americans’ personal finances has hit a crisis level. That’s why it’s important to call out some actual good news trending in employee benefits: the move to help workers pay debt off! Student loan repayment programs allow employers to match employees’ student loan payments much like they do in their 401(k). We love this idea, because it’s something that would actually relieve financial stress and lead to better long-term results. That’s awesome!

3. Automatic Payment Programs and Payroll Deductions

Who doesn’t appreciate all-in-one solutions? Whether that’s subscribing to a meal kit or queuing up an entire series of shows to stream on Netflix, there’s something beautiful about the chance to set it and forget it. And even when it comes to working the Baby Steps, setting up automatic payments can be a great idea!

But it’s not always a great approach—especially in the realm of financial wellness benefits. The trouble with hooking up your paycheck to your payments is that it can make you lazy about your money, or even lose sight of your goals. But with financial flexibility, the paycheck is exactly where automated programs are showing up in spades:

  • Automated savings programs
  • Employee purchase programs that give you discounts on your purchases through payroll deductions
  • Automated bill-pay programs that are also payroll deducted

As convenient as all of this may seem, these programs go against what would actually help employees’ win with money. None of the automatic programs are making a dent in debt or moving anyone toward better retirement savings. Instead of helping workers understand why they’re living paycheck to paycheck, automatic solutions take away the intentionality of getting on a plan. They also make employees feel like they’re making progress without changing their behaviors.

4. Offerings From Big Financial Institutions

We’re also seeing many new financial wellness programs showing up from large financial institutions. Again, the upfront claim is about offering a benefit that helps employees get more financial flexibility in their lives, but the “goods” turn out to be risky.

We’re not talking about companies who partner with unbiased outside vendors in an effort to really help people succeed with money. We’re talking about banks and insurance companies—some who are mainly focused on making a sale. It sounds pretty logical that those kinds of institutions would have something valuable to offer in the financial wellness space. But let’s look closer.

Many of these programs are offered free or at an incredible discount. And when you say “free” to a business owner, you’re going to get some attention! The employer can’t help but think, Hey, I want to help my employees win with money! And I need to win, too! Let’s do this thing for free!

But the question must be asked: What’s in it for them? At the end of the day, these groups have started financial wellness programs for one reason: to get employers to push their financial or insurance products to employees.

What’s worse is that the solicitations include products that go completely against real financial wellness—things like credit cards or pitches to refinance a mortgage. They might say this will make employees more financially flexible, but the truth is that debt is not financial wellness—even if it’s a cheaper form of debt than you already have.

These “flexible” financial benefits are a sales pitch in the form of financial education. The problem isn’t the sales pitch—it’s that these programs mostly feature tools without any real inspiration to change behaviors.

Employee Benefits That Actually Reduce Stress

By now you might be wondering if there are any good employee benefits. You know, like something that could actually help workers with their money? There are many so-called “solutions” floating around these days, but they aren’t solving the real problem of helping employees take control of their money.

What would it be like to have an employee benefit in your workplace that actually helped workers build smart money habits? What if it used inspiring stories of life change to help people get out of debt, learn how to budget, save for emergencies, and invest for a lifetime of wealth? That would be a sweet deal and a real team builder in any company!

Whether you are an employee, an HR rep, or a business owner, benefits matter. In working with millions of employees and thousands of businesses over the years, we’ve found that the most common place workers learn about retirement is from their employer.

The financial problems facing so many American employees are bad and getting worse. But for a growing number, a real financial wellness benefit is helping. And it’s a program created by Dave’s own team!

SmartDollar helps your employees go from living paycheck to paycheck to feeling confident with their money—walking them all the way through the Baby Steps. Our program actually works. In just the first year in SmartDollar, the average user of our program has a $15,500 financial turnaround in terms of debt paid and dollars saved!

How to Bring Financial Wellness to Your Company

If you want better benefits from your employer, listen up!

To help you get started, we’re giving away our Financial Wellness Toolkit. This simple plan will give you everything you need to launch a life-changing financial wellness program at your company. You can help your entire team experience the same results we’ve seen from thousands of companies across the country.

Deliver financial wellness that actually works. Get your Financial Wellness Toolkit today!

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Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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