I'm not in the business of blaming others for my problems. And neither should you be. Blaming others, at best keeps you spinning in place, and at worst causes you to spiral further down. That being said, your employer does control some aspects of your finances. And there are a few instances when your employer does something which can adversely impact your finances. Listen to me discuss the three things employers do that negatively impact your financial life here on this segment of The Pete the Planner radio show on 93 WIBC:
1. Pay Frequency
It's amazing how important when and how often you get paid is. Whether it's monthly, bi-weekly, weekly, or some other frequency of pay schedule, when you get paid can make or break your financial life. How do I know this? Because my job puts me in front of hundreds of people's financial lives and I can tell you with authority that weekly and monthly pay schedules are the hardest to manage. I can also attest to the mass chaos created when an employer changes up the pay schedule. By being aware of the impact of pay schedules, employers can help ease the transition if there is a pay schedule change. They can also help employees out by choosing a pay schedule most beneficial to them.
2. 401(k) Loan Policy
You can do whatever you want with your money which is why many employers give the option of 401(k) loans. 401(k) loans allow you to borrow against funds you've saved for retirement. But by allowing you access to this money employers are actually hurting your chances of retirement. It is your responsibility to not take out a 401(k) loan but employers have the ability to restrict these sorts of loans, and they should.
3. 401(k) Matching Policy
Employers incentivize employees to contribute to their 401(k)s by offering a percentage match. The match is a great opportunity for employers to help employees make smart decisions for the future. While increasing the percentage of the match will always benefit the employee there is another way employers can benefit the employee in this area and, amazingly, it doesn't cost them any more money. Let's say a company offers a 2% match. A company can either offer the match as 100% of the first 2% the employee puts into their 401(k) OR they can offer the match as 25% of the first 8% contributed. Either way the match is 2%, but the second option encourages employees to contribute more to their 401(k)s.
Employers provide us with the opportunity to work and earn an income, but by just changing a few things they could do so much more. Your financial life is your responsibility but your employer's action can impact your financial life.