Tuesday, November 30, 2021

Decision Fatigue: What It Is and Why It Happens


When it comes to business, having employees that you can trust to make quality decisions is important. It’s equally important that these people are focused and clear-minded while at work. You might not know, however, that there is a limit to the number of quality decisions people can make each day. By educating ourselves and our staff about how willpower works, your team can have the tools they need to better fulfill their position and to make meaningful choices in their home life.

James Clear is a best-selling author, speaker, and entrepreneur who focuses his work on habits, decision making, and personal growth. He has a bachelor's in Biomechanics from Denison University ad an MBA from Ohio State University. An article written by him provides interesting insight into human willpower and how to avoid making bad decisions.

James shares that “willpower is like a muscle” that it fatigues the same way a muscle does. During a regular day, people make hundreds of decisions, and each decision we make is like doing one more squat on leg day. Just as your legs get tired and need to rest, a person’s willpower becomes tired with use. This is often referred to as decision fatigue. In a sense, there is a limited number of quality decisions that a person’s brain can make each day.

The next thing to know is that when a person's ability to make intentional decisions decreases, they default to their habits. For your company, this means that as your team deals with daily tasks, they slowly wear down on their willpower’s ability to make intentional decisions and default to established routines. The same things happen in an employee's personal life. Thus, decision fatigue often results in impulse decisions and unneeded grocery store purchases.

These unintentional behaviors lead to significant financial stress when people struggle to meet and keep to their budgets.

One way to help is to encourage making decisions in advance. For grocery shopping, this means sticking to a premade list. For a work environment, this means having very clear habits for routine tasks. Having these habits and premade decisions in place helps your people conserve their willpower for more important decisions.

In regard to financial decisions, education is key. When your employees have established financial habits and routines, it is easier to follow a budget regardless of their decision fatigue. It is easier to stick to their savings plans when they are predetermined. Even when decision fatigue is experienced, employees default to these formed habits, so it’s important to help build good decisions into regular routines.

If you notice that you or your team experience decision fatigue, there are ways to overcome it. James clear suggests 5 things that can help and goes into detail with each.

For more information on decision fatigue and how to make good decisions, refer to the full article here. As well, FFE offers various resources to help your team make smart financial decisions. Feel free to reach out for more information.

We are here to help,

Your Financially Fit Team

Sunday, November 21, 2021

Setting S.M.A.R.T. Financial Goals

Many people struggle to achieve goals because they aren’t well defined. It isn’t enough to say “I want to do more yoga” or “I want to save more money”. These ideas aren’t fully formed and don’t have a plan attached to them. What turns that dream into a goal is making it actionable. If you don’t have a plan for how to achieve your desired outcome, it isn’t really a goal at all, but a wish. This goes for companies, too. If a company sets goals, but doesn't clearly define them, those goals are much more difficult to achieve.

Setting SMART goals helps remove ambiguity and makes achieving the goal easier in the long run. Let’s walk through what smart goals are and an example so you and members of your team can begin setting healthy goals.

The examples provided will be 1) losing weight and 2) saving money.

S - Specific

When beginning your goal, try to answer the 5 Ws: 

  • What am I trying to accomplish?
    What resources (time, money, people, etc) are needed?
  • Why is it important?
  • Who else is involved? Are others doing it with me?
  • When can I regularly work on this goal?
  • Where will I work on this goal? (or where is it located?)

EXAMPLE 1: I am trying to lose weight so that my health will improve (what and why). My spouse wants to lose weight with me (who). We will do this by exercising at the gym (where) every Tuesday and Thursday evening at 5:30 when we get off of work (when).

EXAMPLE 2: I am trying to save money (what) so my wife and I (who) can afford a downpayment on a house (why). We can make a weekly budget at home every Sunday morning when we wake up (when and where).

M - Measurable 

  • How will I know my goal has been accomplished?

EXAMPLE 1: I want to lose 30 pounds - instead of "more weight" because it's easy to measure this.

EXAMPLE 2: We need to save $40,000 for a 20% downpayment on houses that have the space to meet our needs.

In both of these examples, having a specific number and a clear understanding of what is required makes the goal more focused. This way, it is clear what you're working toward and when you are done.

A - Achievable

  • Is this a realistic goal?
  • How can I achieve it?

EXAMPLE 1: I can lose 30 pounds because I would be within a healthy weight range for my height if I do so. By focusing on losing 3-4 pounds a month, my goal is more realistic and can be a sustainable change.

EXAMPLE 2: It feels far-fetched right now, but is achievable as long as we are consistent. Realistically we can save $500 a month right now, meaning it would take 80 months or 6.7 years to reach our goal. To make it more achievable we could cut some of our spending on eating out or on streaming services and put that toward savings.

R - Relevant
  • Is this a worthwhile goal?
  • Is it the right time to work toward this goal?

T - Time Frame
  • Make time-bound goals.
    • What can I do each week?
    • What can I do each month?
    • What results can I see in 6 months?
    • When do I expect to be completed with my goal?

EXAMPLE 1: I think I can realistically lose 3-4 pounds a month, so it will take 8-10 months to reach my goal.

EXAMPLE 2: Based on saving $500 a month it will take 7 years to reach our goal, but we want it to take 5 years. By cutting down streaming services and eating out we could save $680 per month and be done with our goal in 4.9 years!

Now practice setting your own goal using these 5 factors. What is something you've been wanting to make happen? Financially Fit also offers more resources on Smart Goal Setting to members under our "tools" section. Feel free to read more information or reach out with questions. Our team is here to help!

Wednesday, November 10, 2021

Budgeting Step-by-Step: Help Your Staff Get Started

Budgeting is the "regular check-up" of the financial world, but it is just as important to employee health as those physical checkups. In an earlier blog, we discussed the health effects that financial stress can bring, and how it affects your company. By helping your employees get started, they will increase their opportunity to save money, pay off debt, and meet their goals, thus decreasing this stress. Here are some basic explanations and 5 easy steps to help any employee complete their first budget.

In a budget, you track 3 basic things: money
entering your accounts, money leaving your accounts, and your financial goals.

Income can include your regular paycheck, side hobbies that bring in money, investments, scholarships, gifts - anything that adds money to your account. Expenses, on the other hand, are anything that you spend money on. They can be broken up into 2 categories.

  • Fixed expenses are reoccurring monthly costs that are the same each month. 
    • This includes things like rent or mortgage payments, car payments, class fees or membership fees, and any subscriptions you have
  • Variable expenses are things that cost different amounts each month or don’t regularly occur. 
    • This includes things like utilities, groceries, clothes, gifts, eating out, travel expenses, and car repairs. Some variable expenses are fairly regular, but some are unexpected.

Steps to Follow:

  1. Gather your financial records.

    Having all your information collected makes writing everything down much faster. This process can include getting bank statements (paper or mobile), receipts, checks, etc. 

  2. Begin by writing down your income because this is generally the easiest step. 

    • Start with your regular income
    • Then look at income from any investments
    • After that, focus on side jobs or hobbies
    • Lastly, look at any other source such as gifts, scholarships, or government grants.

  3. Write everything you spend money on. 

    This is where you pull up your credit card statement and jot everything down. It can be easier to track spending weekly, so the end of the month feels less overwhelming. Then there isn’t one day where there is everything to document.
    • Start with your fixed expenses because these are straightforward. What do you make payments on? What subscriptions or membership fees do you have? What is your rent or mortgage payment? What other expenses are like these?
    • Then move to variable expenses since these require more digging. This category includes everything that your fixed expenses missed. Exactly how much did you spend on groceries? on eating out? Did you have any car trouble or unexpected expenses? Did you do any traveling? How much was gas this month? 

  4. Subtract your expenses from your income to see the total that you have remaining.

    This is called your “net income.” This money is what you can put towards savings or debt reduction! Savings can include fun things like a toy or a trip, holiday savings, an emergency fund, or other things you want to budget for. Debt reduction focuses on making payments toward any loans or debt. This could be increasing your car or mortgage payments to pay it off faster. It could also be working on paying student loan debt.

    If you don’t like what you see, you can seek help in ways to cut expenses or ways to increase your income. FFE offers financial counselors that can walk you through this process one on one.

    For many families, this process can start with decreasing spending on eating out. It can also be limiting the number of subscriptions you have. 

  5. From your net income, start setting goals for your finances.

    How much would you like to save each month? How much would you like to pay toward your debts each month? We will talk more about goal setting next week, but start with setting a goal that seems achievable, aim to reach that in your monthly budget.

If you need help thinking of what to write or how to track it, Financially Fit Employees offers a simple budgeting worksheet under “tools” to help you get started. This worksheet has a spot for you to enter everything in, and it does step 4 for you automatically! Start budgeting this week, and see how your finances improve!

Visit Financially Fit Employees at https://financiallyfitemployees.com/

Wednesday, November 3, 2021

Saving Money Starts with a Budget

Helping your employees plan for big life milestones like retirement or for emergencies and debt reduction is important for their financial wellness. Caring for your employees can lead to significant improvements for your company as well.

This process of saving begins with an understanding of how much money you have and where it goes - a budget! In its most basic form, a budget details out how much we make in a given time, how much we spend, and what we spend it on. As a company, you know the importance of keeping a budget, but that knowledge isn’t always shared by our staff. Helping to improve our employee’s financial literacy will make a difference for the company, as well.

By writing out their spending, your employees can easily recognize spending trends and make changes. It also forces them to face the reality of what they buy. 

While 4 streaming services may feel necessary, spending $60 a month on TV is much less appealing. Everybody has their own spending struggles. Maybe other people need to look at their spending on eating out., including snacks and coffee. It’s crazy how fast those 4$ items add up, huh! 

This doesn’t mean that employees can’t spend their money as they want to. It’s about being aware of how much you spend and what your options are. 

It’s about making informed decisions.

Once employees see how much they have left at the end of their budget, they can be intentional with those funds. This can lead to reasonable debt reduction and savings goals, and help them to be less stressed and more prepared for things that come up. It can also help them to prioritize work by removing distracting stressors.

Register for a starter account with us, and your employees can access budgeting sheets to help them get started. There is even a basic savings sheet to help them make financial goals and see how long it would take to reach them. Help your staff to feel confident in their finances.

Reach out if you have any questions. We are more than happy to help. 

Wednesday, October 27, 2021

The Impact of Financial Stress

From Capital one
    According to a survey done at CreditWise from Capital One, finances are a leading cause of stress. 73% of people surveyed have more stress from finances than from work, family life, or politics. When looking younger generations, this increases to 82% of people. As this younger generation enters the work force, it is important for employers to recognize this stress and understand the impacts that it can have on employees. 

    An article by the Mayo Clinic explains the human stress response well. When experiencing stress of any kind, our adrenaline and our cortisol levels are increased. This elevates heart rate and blood pressure, as well as increasing sugar in the bloodstream to allow us to react faster. Cortisol also also alters the immune system's ability to respond and it suppresses digestion and growth process.While important in fight-or-flight situations, these effects can be damaging over time.

Long term stress can lead to:
    - anxiety 
    - depression
    - digestive problems
    - headaches and migraines
    - muscle tension and pain
    - heart disease, heart attack, high blood pressure and stroke
    - Sleeping problems and insomnia
    - weight gain
    - memory and concentration impairment

    These health risks for employees can lead to higher costs for the companies they work at. People who are stressed about their finances often use work time to manage personal issues, and tend to be less engaged in their roles. They are also more likely to miss work because of personal and health concerns. Many of these individuals, however, are hopeful that their finances will improve over the next year (53% of people) and 59% of respondents said they would like to learn more about financial tips and improving their credit score.

    This is where employers come in. By offering financial coaching as part of an employee benefits package, employers can recognize this stress in employees and properly support them. With coaching, employees can receive the help they need to stabilize and improve their financial state, leading to a decrease in stress and the associated health issues. By helping your employees with their finances, companies are enabling employees to improve in their positions, have higher satisfaction, and be more attentive to their roles on the job.

If you want to learn more, visit our website at https://financiallyfitemployees.com/

Monday, September 27, 2021

Why Your Employees Are Stressed

Late last month, Investopedia published an article that analyzed the survey results of Verywell, which found that over the previous 30 days, COVID-19 stress was not the top concern of respondents. Instead, 27% of respondents claimed that their biggest source of stress was financial problems. Other financial stressors mentioned were the pandemic, work, daily life, personal relationships, parenting and romantic relationships. Although it’s evident that some of the financial stress was likely induced by the pandemic, it’s important to help your employees properly recover. 

According to Investopedia, individuals with low to middle income levels are likely to stay stressed longer since they are unable to financially recover as quickly as their upper class peers. For example, the survey found that over half of people who earn less than $75K a year are still mentally recovering from the pandemic. Furthermore, to show a direct comparison, the Silent Gen who have a household income over $150K reported that 71% of respondents had mentally recovered from COVID, whereas Gen Z employees making under $50K a year only reported a 21% mental recovery rate.

Although stress is subjective among employees, it’s important to analyze those with lower salaries and cater to their financial struggles and needs in effort to reduce stress. 

To read more from Investopedia, please click here

Written By: Your Financially Fit Employees Team

Monday, September 20, 2021

Reduce Employee Turnover

As the economy recovered from post-pandemic downfalls, economic stresses still remained high and with that came skyrocketing employee turnover rates. Released on September 11, 2021, the Society for Human Resource Management (SHRM) released a survey, with the help of Morgan Stanley, that analyzed how employers responded to the reality of financial wellness around the United States.

The results found that there are two main financial benefits that companies offer their employees: Retirement plans (95% of organizations) and safety insurance (89% of organizations).  

Furthermore, there are three remaining benefits that only a small percentage of employers offer their organization: 

  1. Financial Planning: only 35% of organizations implement long-term security sessions about things like investing and wealth management.

  2. Financial Coaching: 24% of organizations implement financial coaching that talks about financial basics, like saving and credit management. 

  3. Emergency Saving Funds: 15% of organizations offer a saving fund separate from retirement savings for employees.

As mentioned in above, it’s no secret that COVID-19 introduced many financial struggles for individuals, and financial benefits that may have not been desired before may be critically important. The survey also asked 1,205 HR professionals, and 74% said their workplace had not introduced or expanded any existing financial benefits for employees. Without the proper financial support they need, employees could be feeling less valuable in the workplace which could lead to less engagement and the encouragement to seek employment somewhere else that offers the financial aid they need. 

To read more about SHRM’s survey and the demographics that are more at risk of poor financial health, please visit: www.shrm.org

Written By: Your Financially Fit Employees Team