With inflation on the rise, a frenetic home-buying market, job insecurity, gas prices surging, volatility in stocks and bonds, the rise and fall of cryptocurrencies, and other financial pressures, your employees at all income levels may be experiencing heightened financial stress.
Team members already living paycheck to paycheck, struggling to pay off credit cards and student loans, and falling behind on retirement savings may be distracted on the job, miss work, experience mental health issues, or even switch jobs to add a few more dollars to their paychecks.
For employers, this means higher turnover, reduced productivity, increased medical costs, more 401(k) loans and hardship withdrawals, more wage garnishments, and more employees taking on side hustles and second jobs or asking for raises to make ends meet.
A holistic, accessible financial wellbeing program provides a safety net and support to help employees weather all of these storms. Providing employees with digital tools, simple, jargon-free financial education, and direct access to free, unlimited guidance from fiduciary Certified Financial Planner™ professionals can help reduce financial worries, provide perspective, address any current financial crisis, and make a plan to build for the future.
Guidance for employees of all income levels during a market downturn
In turbulent times, financial wellbeing support for employees is an essential component of any benefits and employee wellness plan — now more than ever. Here are some helpful pieces of guidance you can pass along to your team.
Market changes are normal
Employees may be stressed as they watch the value drop of their 401(k) or other investment accounts. That can be scary and frustrating, especially on top of rising prices for almost everything. LearnLux Certified Financial Planner™ professionals offer reassuring guidance that market changes are normal. Over the years, the market has had many ups and downs, such as when the internet bubble burst in 2001, during the 2008 financial crisis, and when businesses were shut down in 2020 due to the coronavirus pandemic.
Market downturns don’t usually last very long
The longest that the market has ever been down more than 20% (a “bear market”) was 2.7 years during the great depression, but on average bear markets last only 9.6 months.
It’s the long-term that matters
Historically, after every downturn, the market has always come back up. The S&P 500 index (a good indicator of market performance) has averaged gains of 10.5% per year from 1957 to today. (Investopedia)
Stay true to the plan
Employees may be thinking about selling their investments now and holding them in cash so that they won’t lose any more value. It's important to note that shares sold now could lose out on potential future growth if the market goes back up.
Even out your risk with dollar-cost averaging
While a bear market may be a great time to take advantage of lower prices, dollar-cost averaging is the recommended long-term strategy. Dollar-cost averaging is the practice of investing a fixed dollar amount on a regular basis, regardless of the share price.
How employees can take action during a market downturn
During economic downturns, employees seek trusted guidance and the tools they need to take action. Here are a few ways that team members can feel empowered about their financial situation during turbulent times.
Make or review their budget
With inflation at over 8% and gas prices soaring, it can be hard to make ends meet. Reviewing your budget and making any needed adjustments to your spending is the best way to stay ahead of the game and avoid drawing on your emergency savings or building up credit card debt when money is tight. LearnLux members can review changes to their cashflow in real-time with the net worth and transaction insights feature and balance budget projections with the interactive budgeting tool.
Educate themselves about their investments
Employees can check out LearnLux lessons on investing to understand their options and make sure their investments match their desired risk level and time horizon.
Sign up for accessible FAQ events on inflation & the economy
During market downturns, LearnLux Certified Financial Planner™ professionals host special events to answer employee questions in real-time. Information is presented in an accessible and jargon-free way for employees of all levels of financial confidence.
Speak with a LearnLux Financial Planner
Employees can easily book one-on-one calls with a trusted expert if they are worried and aren’t sure what to do next. A planner can help them review their situation and make a plan, bringing peace of mind during these challenging times.
Remember, market fluctuations are normal. Employees should think long term about their investments and consider making short-term adjustments to their spending. They can be prepared to weather any storm with helpful guidance from their employer and a trusted financial wellbeing program.