If nothing else, 2020 has taught us everyone’s financial situation is unique.

Nobody escaped the effects of the pandemic. Everyone experienced different challenges depending on their existing situation. Everyone had to find a way to handle the stress, overcome financial struggles, and work through personal challenges.

This left many having to make difficult decisions and sacrifices to make ends meet.

With 78% of America living paycheck to paycheck and 40% unable to cover a $400 emergency expense, COVID-19 hit personal finances hard. Many were left with nowhere to turn to, so they looked to their employers for guidance and support. Employers with little financial support to offer other than 401K loans quickly realized that employees deserved better options.

How Stimulus Was Used

The June 2020 New York Fed’s Survey of Consumer Expectations indicated 35% of households used their stimulus payments to reduce debt, and 36% saved the payment. In August, the New York Fed asked what consumers would do if they received a second stimulus payment, and 45% of respondents said they would save it.

Employees desperately want to establish a budget and set financial goals that will enable them not only to stabilize their finances but to prepare them to handle unexpected financial challenges. To do that, they must first assess their current situation.

Many employees may be surprised at what they uncover when they dig deep to understand their financial situation. When employees have the option to take an assessment of their financial health, they can visualize their current finances and identify goals. From there, employees can then develop a personal roadmap to guide them down a path to financial success that corresponds with their needs.

In the midst of the pandemic we saw a 20% increase in our FinFit members not contributing to their 401K, and an 11% increase in members who had to stop paying down debt due to financial strain. It is no surprise that COVID-19 took a toll on employees. But there was some good news: There was a 14% increase in employees who prioritized setting up an emergency fund as their top goal.

Employee financial health With 78% of America living paycheck to paycheck and 40% unable to cover a $400 emergency expense, COVID-19 hit personal finances hard. Photo: FinFit The data continues to show positive trends.

As of October 2020, 35% of employees have established their top financial goal as setting up an emergency fund, 30% want to pay down their credit card debt, and 18% want to set up an investment account.

In a world of uncertainty, it is encouraging to see that individuals understand the importance of saving and eliminating debt. But without the appropriate knowledge, resources, and guidance, it’s nearly impossible for employees to develop a personalized plan that works for their situation.

And if you think the effects of the pandemic are subsiding, think again.

Some employees may be going back to work (virtually and physically), but their financial challenges continue. Government funding assistance ended in late July.

People Fear Loss Of Income

When looking at the state of employees’ financial health during what most considered the peak of COVID-19 (March-July) and August-September, the percentage of employees who feel they are in a vulnerable state of financial health has increased by 10%, 13.5% said their personal finances are in a more fragile state now than they were during the peak of the pandemic, 66% of households could only make it three months if they lost their main source of income, and 41% could only make it one month – maybe less.

Financial hardships are personal, and many employees are not comfortable asking employers for help. For a financial wellness program to benefit each employee, it must meet them exactly where they are in their financial journey. Tailoring is critical.

The key to helping employees achieve ultimate financial success is to offer a holistic suite of financial wellness services that supports the four key pillars of financial wellness: spend, save, borrow and plan. These four pillars defined by the  Financial Health Network support holistic financial well-being, and it’s critical to implement a financial wellness program that supports employees in all four areas.

Offering benefits or single-point solutions that focus only on one of the pillars can add value, but they aren’t effective at driving real behavioral change.

The pandemic is unfortunately giving many employees first-hand experience with how mounting debt and lack of savings can impact their lives. This uncomfortable position is creating a desire and a sense of motivation to grow in financial acumen and to make the necessary changes to reach a state of greater financial stability.

David Kilby founded the financial wellness benefit platform FinFit in 2008. He is a CPA and serves as president of the Virginia charity, the Ability Center, which helps children and adults with disabilities lead productive lives.