Counseling Employees on Personal Finances

Counseling Employees on Finances:

More and more of my clients are having difficulty with their employees who are in a personal financial mess.  Tough economic times tend to expose the strengths and weaknesses of people’s overall money management.  Sometimes they try to maintain their regular spending habits with credit without the thought that eventually they have to pay the bill.

As an employer, we have to be very careful trying to “help” them out of their situation.  Providing counsel can be difficult because in order to do a good job we really need to know their entire financial picture, and they are often reluctant give us the complete information.

Here are a few things that we can do:

1.      Ask them if their problems are simply some late payments on some debts—or something that is much more serious (facing bankruptcy).  Based on that, encourage them to get the help they need in the local area.  Perhaps even suggest a good credit counselor, someone at your bank, or someone that can help them with their specific issue.

2.      Encourage them to take action.  Too many times people who are getting collection calls and dunning letters just avoid the issue and do not respond or communicate.  Help them understand that this will get worse and the earlier they communicate the easier it will be to resolve the issue.

3.      Do not keep giving them loans.  The occasional emergency loan, so long as it is paid back promptly with interest is not a problem, but very often these loans are not paid back or the employee leaves without paying.

4.      Provide them with materials that can help them do a better job of managing their personal finances.  Several of my clients have purchased the Dave Ramsey materials and found them very helpful for their employees.  The employer purchases the original materials and CD set for the employee to borrow, and then the employee can decide if they want to continue on with the program on their own.  If so, the employee buys their own materials and keeps up the program (budgets, tracking expenses, prioritizing debt reduction, etc.) with their family.  These materials are available at www.daveramsey.com.  Ramsey has a very successful radio show and is a regular contributor to business and news TV programs on finance.  His advice is practical, blunt and specific.

For the future, consider having a financial counselor come to your business and provide a short seminar on a series of topics, such as: Understanding Your Home Mortgage; How to read a Credit Card Statement; What to look for in Refinancing Your Home; How to set up and follow a Budget; etc.  These programs seem to go well when done after hours when other members of the employee’s family can attend as well.

Don Tyler

Tyler & Associates