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<\/p>\nThe year 2020 has certainly made workers anxious over finances; it will probably go on record as being one of the most stressful years ever. The pandemic has illustrated the need to have money set aside in savings, leading some employers to offer emergency savings accounts (ESAs), making it easier for workers to plan for unforeseen financial stresses.<\/p>\n
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ESAs\u2014also known as emergency fund accounts, rainy day accounts and sidecar accounts\u2014are similar to 401(k) accounts. Much like those popular retirement accounts, they are funded through automatic payroll deductions…but there are a few key differences. ESAs are taxed as income and can be withdrawn as needed, penalty-free. They\u2019re a good option for employees to set aside savings that can be accessed in the event of a financial emergency, such as the current COVID-19 crisis, using a debit card or electronic transfer.<\/p>\n
ESAs have been around for a while, but are just now enjoying a surge in popularity. Recognizing this, some companies are creating new products and programs to help their employees stay financially afloat during these difficult times. They are increasingly being offered as part of an organization\u2019s overall benefits package and are a great tool for encouraging individuals to adopt healthy saving habits.<\/p>\n
COVID-19 has shed light on the importance of being prepared for a financial emergency. With large numbers of workers being furloughed or suffering through wage decreases and reduced hours as companies are forced to limit or suspend operations, many have found themselves in unexpected financial trouble. ESAs help people avoid expensive options such as withdrawing from retirement savings accounts or taking out high-interest payday loans to get by. There are other unexpected crises beyond the pandemic, of course. Emergency savings accounts provide employees with the ability to weather any number of difficult situations that affect their income without taking drastic actions. 401(k) accounts are an important part of an employee\u2019s long-term financial security, but having a separate savings account for short-term purposes helps motivate employees to save and eliminates the need to deep into their retirement savings, which can have expensive consequences.<\/p>\n
Before establishing emergency savings account options, you should be aware that there are issues involved in making contributions and how funds can be withdrawn. It\u2019s crucial to educate employees by thoroughly communicating exactly how ESAs work. But doing so is a worthwhile investment in time, one that will help workers weather financial uncertainty long after COVID-19 is nothing more than a memory.<\/p>\n","protected":false},"excerpt":{"rendered":"
The year 2020 has certainly made workers anxious over finances; it will probably go on record as being one of the most stressful years ever. The pandemic has illustrated the need to have money set aside in savings, leading some employers to offer emergency savings accounts (ESAs), making it easier for workers to plan for…<\/p>\n","protected":false},"author":1,"featured_media":2218,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"schema":"","placeID":"","no_match":false,"name":"","company":"","review":"","address":"","city":"","state":"","zip":"","lat":"","lng":"","phone1":"","phone2":"","fax":"","mon1":"","mon2":"","tue1":"","tue2":"","wed1":"","wed2":"","thu1":"","thu2":"","fri1":"","fri2":"","sat1":"","sat2":"","sun1":"","sun2":"","hours-note":"","footnotes":""},"categories":[5],"tags":[],"class_list":["post-2217","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-human-resources"],"yoast_head":"\n