5 Steps to Help Employees Set Aside Rainy-Day Funds

Did you know that up to 60 percent of your people could be living paycheck to paycheck? This means there is just enough money to meet basic needs and pay bills, with nothing leftover at the end of the pay period.

According to recent ADP Research data, 60 percent of United States workers live paycheck to paycheck, with higher numbers in other countries. Some people have even had to take on additional work to make ends meet, with up to 23 percent saying they have two or more jobs. But taking on additional work doesn't always close the paycheck gap. In fact, 59 percent of workers who have two jobs say they still live paycheck to paycheck. According to the 2024 ADP TotalSource® Employee Benefits Survey, 28 percent of workers have less than 500 dollars set aside as emergency savings.

The paycheck-to-paycheck life

One thing is clear: The rising cost of living only exasperates things for those living paycheck to paycheck. When people live paycheck to paycheck, there's little wiggle room for them to store away emergency savings funds. Having just enough money to pay bills and basic expenses makes building any emergency savings fund nearly impossible. If the car breaks down or there's a hospital visit not covered by insurance or any other financial emergency, many employees have very few options. Quick loans often come with high interest rates, and placing bills on credit cards isn't usually a good idea.

What's more, the financial stress of living paycheck to paycheck doesn't just affect people when they're paying bills or purchasing groceries. A recent financial wellness survey found that 40 percent of employees say that living paycheck to paycheck saps their productivity at work, with the number rising to 60 percent among Gen Z workers. So, beyond just caring about their employees, employers have a real incentive to help relieve their workers' financial stress. According to MetLife's 2023 Employee Benefit Trends report, 62 percent of employees believe their financial well-being significantly affects their job performance. This financial stress is linked to lower engagement, decreased morale and increased absenteeism.

Take action

So, what can employers do about this?

Some steps to helping employees build emergency savings funds are apparent; some are not, but it all starts with education.

1. Ensure fair, market-value wages

The first and most obvious step to helping your people build emergency savings funds is to ensure you're paying a fair market value and transparent wage. This is the basis upon which all the other steps are built. Benchmarking tools can help with this and allow employers to see what other employers pay for similar roles. Many employers are already doing this, and it's a great first step, but it won't always get your people to that desired emergency savings fund.

2. Offer financial education opportunities

Providing financial education is another foundational step. Without basic financial literacy, even the best-intentioned employees may not succeed at squirreling away a rainy-day fund. Educating employees on financial wellness strategies can seem like a big lift, but it doesn't have to be. Whether you choose to bring in a financial expert for in-person classes, offer online training courses, or even provide employees with access to a financial literacy and education app where they can learn at their own speed, giving employees a way to gain more financial wherewithal is foundational to their (a) financial wellness, and (b) their ability to build an emergency savings fund.

3. Offer payroll deductions

Offering payroll deductions is one of the easiest things employers can do to help their employees build an emergency savings fund. An automatic deduction that diverts money to a savings account before workers "see" that money can be more effective than having to make a special effort to set the money aside. And once set up, the deductions require no additional thought or action from the employee. Savings can add up quickly.

4. Consider matching contributions

Consider matching employees' contributions to their emergency savings fund. Similar to match programs for retirement savings, flexible spending accounts (FSA) or Health Savings Accounts (HSA), matching the employee contributions to their emergency savings funds may be just the incentive they need to start tucking money away. Watching the account grow with the additional support can be even more rewarding.

5. Consider implementing a financial wellness program

Financial wellness programs are initiatives designed to help improve financial literacy through education on budgeting, saving, investing, debt management, retirement planning and more. Providing a financial wellness program can help integrate overall financial health and education into a larger employee wellness initiative. Making programs available company-wide can help break down barriers to attending because employees can participate with colleagues and leaders. Financial wellness programs can help employees build a foundation of financial literacy and health that will help them take the steps they need to build up their emergency savings fund and become overall financially fit.

Key takeaways

Whether it's a combination of offering a financial wellness app or online resources, bringing in a financial expert to teach classes and providing employees with an easy way to set money aside, giving them options and raising awareness about the importance of building an emergency savings fund can empower your employees to prioritize their financial wellness.

Consider offering a one-stop-shop solution that helps streamline payroll processes, empowers workers and supports financial wellness. With personalized pay options for your team's unique needs, Wisely by ADP is ready to support you and your employees.

To show their commitment to financial wellness and help build awareness around the importance of having emergency savings, Wisely is launching the Wisely Win to Save Sweepstakes. You and your employees can enter for a chance to win a $100 emergency savings fund.¹

_{¹NO PURCHASE, PAYMENT, OR ACCOUNT NECESSARY TO ENTER OR WIN. Sweepstakes is open to legal residents of the 50 United States & DC, age 18+. See rules for all details (including no-purchase entry) at mywisely.com/app/main/sweepstakes/rules. Begins 12:00:01 AM ET on 4/1/25; ends 11:59:59 PM ET on 4/30/25. Twenty-five (25) prizes of $100 U.S each (for a total approximate retail value of $2,500 USD) will be awarded. Prize will be awarded as a Wisely statement credit if winner is a Wisely member; prize will be awarded as a gift card if winner does not have a Wisely card. Odds depend on number of entries. Void where prohibited and outside U.S. This sweepstakes is in no way sponsored, endorsed or administered by, or associated with, Fifth Third Bank or Pathward®.}

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