Mark: Welcome to unsuitable on Rea Radio. The unique financial services and business advisory show that challenges your old school business practices and the traditional business suit culture. You’ll here from industry professionals who think beyond the suit and tie to offer meaningful modern solutions to help you enhance your company’s growth. I’m your host, Mark Van Benschoten. We’ve touched on the importance of preparing for retirement during previous episodes of the podcast, and I think that says a lot about how important this type of planning is for all of us.
Today we’re going to talk about what we can do to become more financially fit, as well as what businesses can do to help their employees on their financial wellness journeys. Here to provide some insight for us is Darlene Finzer, who’s a principal with the firm, and the director of our benefit plan audit services. Welcome to unsuitable, Darlene.
Darlene: Thanks Mark, it’s great to be here.
Mark: We’re glad that you’re here. A question before we dive in, how are the asses today?
Darlene: The asses are fine.
Mark: How many asses do you have?
Darlene: I would have right around 60.
Mark: In disclosure, Darlene and her husband raise donkeys, what’s the appropriate technical term?
Darlene: That is the appropriate technical term. Asses come from the boys who are jacks, and they’re sometimes jackasses. The females are jennies, and obviously they’re never called asses.
Mark: Is that directed at me?
Darlene: No, not at all.
Mark: Making sure, because you’d be the third person today to call me an ass.
To get started, and not to joke around about financial fitness and wellness, cause it is a serious topic, and it does have an impact on business, and we’ll get into that in minutes. What’s your definition of financial fitness or wellness, are they one and the same?
Darlene: Financial fitness, or financial wellness are one and the same. As far as the definition and what it means to people it can mean different things to different people. There isn’t a certain definition, but what financial fitness means to me is having control over your finances. Having goals in place, and having a means to reach those goals.
Mark: That’s a great point. Goals, what type of goals would you suggest that somebody be setting?
Darlene: The sad fact in the U.S. is that we have nearly two out of three individuals who are living paycheck to paycheck. Financial fitness is getting out of that groove, being able to plan for life events, being able to plan for retirement, being able to plan for any type of goals that they might set for themselves. If they want a new vehicle, if they want to buy a house, if they’re planning for education, and unfortunately if people are not planning well with their finances they aren’t able to reach those goals.
Mark: Right, I think it would be very hard if you want to buy a house and you don’t know you need to start saving for a house. I guess it could happen by luck that somebody could have enough money for a down payment, but if they’re not thinking about it, not planning for it, it’s probably not going to happen.
Darlene: Right, exactly.
Mark: How do you handle your financial fitness, not that I need to know what your paycheck, but do you sit and plan out goals periodically?
Darlene: I do. The basic of financial fitness is being able to create a budget. When people are living paycheck to paycheck, a lot of times they don’t have that budget in place. Not having that budget in place they might have money coming in, but they have no idea how that money’s being spent, or where it’s going. The very basic of financial planning is understanding your budget, not only what income you do have coming in and how that money’s being allocated or how it’s being spent.
Mark: That to make it right, how are you going to make any changes if you don’t know what’s going on.
Darlene: Exactly.
Mark: Where you think this financial fitness, when should somebody start learning this, and being educated about this?
Darlene: People can actually start at a very young age. When I say a very young age I’m talking grade school age. To give you a good example I’ll talk about my personal experience. Whenever I was about 8-years-old my first job was working for my dad. I grew up on a dairy farm. We had crops, we had to make hay in the summer to feed the cows. My first job was helping to unload the small square bales, and we would spend all day unloading those square bales.
My responsibility was to push the bales to the front of the wagon, so they could be thrown into the mower, loaded on the elevator to go up to be stacked in the mill. I got paid a penny a minute, so my dad taught me responsibility. I had to work hard. I got paid for the work that I did, and also learned a little bit about time management.
The Ohio Society of CPA’s also has a program, it’s called the FETCH program. That program is a board game that CPA professionals take into the classroom in grade school, and it teaches those kids about budgeting, which we’re talking about the very basics of financial wellness. The different squares around the board game allows them to make choices. They have prizes that their dog can win, where they are earning income, or they might have expenses where they have to buy certain items for that dog, and be able to provide for that dog. It’s teaching the basics of how to budget.
Mark: That’s into the grade school, correct?
Darlene: It is grade school level.
Mark: Is it fourth, fifth grade?
Darlene: About fourth grade, yes.
Mark: I guess you, they teach it earlier versus later. I think it would be more difficult for a 30-year-old to break a habit that they’ve been going on for 10, 12 years, that they’ve been out their earning. To get somebody started in it in a career with some basic financial literacy I think is very important. What’s the down side, not to the individual, because I agree there is a huge downside, but to businesses, to the employer, to having somebody that might not have these skills?
Darlene: Sometimes the employer doesn’t think about what the downside might be if their employees are not financially fit. They themselves as the employer, business owner, management, might have a handle on their finances, but they might not feel like they want to get involved with their employees personal lives to that extent, where they are helping them to plan financially. If they are offering programs, such as a retirement program, they feel it is up to the individual to make that decision whether or not they want to participate.
The downside is if their employees are not able to manage their own money, there is definitely some repercussions for that business. As far as if someone is struggling financially, they are going to be lower in productivity, and that obviously has an impact on the business. They can also be having higher health costs because of people…
Mark: Stress.
Darlene: Being stressed about this, so their health insurance premiums, health care costs, are going to be increasing. There could be a lot of absenteeism, because employees are making themselves so sick that they are physically draining their bodies, because they don’t have the money.
Mark: Being the negative guy that I am, I’m thinking that it might increase opportunities for employee theft. That I can take this, I need it, I need it more than the company does, because I’m struggling, I can’t balance my checkbook, but I can take it from here. I would think that might be another downside.
Darlene: I think it would be a downside.
Mark: That would be kind of sad that somebody’s under that stress, and they feel that’s the solution. Can I ask you a question, no sure you’re going to know the answer, cause I don’t know the answer, but you’re smarter than me.
Darlene: I won’t go that far.
Mark: There’s wellness programs tend to be around the healthcare, but do people offer wellness programs for financial? Is that, have you heard anything like that, an employer to it’s employees?
Darlene: Yes, actually there are programs that are available. There are a lot of businesses that provide those wellness programs that surround the financial fitness portion of it. Some of them are free, some of them have some costs associated to them. I would say that the programs that are most effective are the ones that are more holistic. There’s one out there that I’m aware of, it’s called, “Learn Best,” that offers a complete holistic approach to the point where they have individual advisors who are speaking with the employees, at least on a quarterly basis. Setting goals, and making sure that those individuals are reaching those goals.
Mark: Interesting, that sound kind of unique. I think any cost with that you could measure against increased productivity, happier employees, lower incidence of employ theft, and it could justify any cost of that. Plus it’s just the right thing to do it sounds like.
Darlene: Exactly. More employers are looking at implementing financial wellness programs. Statistics that I’ve heard for 2016 is that about 50% of employers are looking to implement some type of financial wellness program.
Mark: That’s great. I think maybe it may as simple as just some acknowledgement of here are things that you should be doing on an individual, it probably could be some level of a wellness program?
Darlene: What individuals are looking for whenever they are experiencing financial stress is the basics.
Mark: Like the Powerball winnings?
Darlene: Well, if that would have happened with me, then I wouldn’t be here today. The basics of financial programs, such as the basic budgeting, how to reduce debt, how to implement savings. A lot of people don’t have a fund for any life events that might occur. If you have a vehicle that needs repaired, or if you have repairs in the home, or new appliances, there’s a lot of people that don’t have money set aside to be able to account for those major expenses.
Mark: I assume that the people get scared. I mean we’re accountants or CPAs, we understand this stuff, it’s just they’re intimidated by it, or they’re scared of the results?
Darlene: I think that they don’t understand what it would take to get to that level. If they feel that they are spending all of the money that they are making, then they don’t feel that they can save for these life events, that they can’t save for retirement. It doesn’t have to be a major change to make those changes happen where they can save money. You can start out with subtle changes. To give you a great example there’s a 365 day penny challenge. What that is, is for each day that you are saving you save that number of pennies. On the first day you save one penny, on the second day you save two cents, on day 365 you’re saving $3.65. At the end of that time period you will have amassed over $660.
Mark: Wow, that’s great. I was going to ask you what that math is, I assumed that you would know that.
Darlene: I checked into that before we talked.
Mark: I never heard of that before, but that would be a great way to save. You set this out, what’s a penny a day, but $660 that’s a lot of money, that could be holiday gifts, it could be a lot of things.
Darlene: Exactly.
Mark: It could be a down payment, wow, that’s a great idea. How did you get interested in financial fitness and wellness?
Darlene: Working on the retirement plan side, we see what the trends are in the retirement plan industry. A lot of individuals will not be prepared for retirement, and that can also be a negative effect for the employers. If you have employees who are not financially able to retire, then they are going to working past their normal retirement age, and that doesn’t allow room for new talent to come into the business. There’s a real crisis that will be seen within the next several years, because of people not being…
Mark: Able to retire.
Darlene: Right. Seeing that and knowing what the trends are, and knowing that there are programs available makes me want to share that data, and help employers so they can help their employees to be financially fit.
Mark: Is it just for large employers that can do this?
Darlene: Any employer can implement a program. It depends on what that employer wants to offer for their employees. It doesn’t matter what size they are, and it might be something that if they are a small employer that they want to do for themselves.
Mark: For the comment we want this to be more than just a paycheck. It’s not just a paycheck to the employer, and I think this would go along way to saying we care about you as an individual, we care about your family, we want to make sure that you’re secure, and here’s something that we can offer.
Darlene: Right, I think it is a great program for employers to offer their employees. If the trend is true that right now we have 50% of the employers who are starting to offer these programs, I can only see that increasing. Whenever 401k’s came into the mainstream marketplace that was an incentive for individuals to hire on with employers. If employers are now offering these wellness programs, and that is something that the general public needs, if they are considering between two employers, they might choose an employer because they offering that wellness program.
Mark: That’s great. The State of Ohio has some, for a child to graduate high school they have to take some class. Is that true on financial, maybe not literacy, but financial terms? Are you aware of that?
Darlene: I have not heard that.
Mark: I think it’s come out a couple years ago, and because of the Olivia Victoria, they had to take it and they didn’t understand why they needed to calculate an interest rate on a car loan. I think that’s a requirement, so it’s relatively new, which I think is great. I think it was just a very short term, it might have only been a ten week class. I think they had it in their Social Studies, so I’m not quite sure why it was in Social Studies, but I think that’s great that Ohio is recognizing it, but it probably needs to do more.
Darlene: Definitely. There was recent study done on financial literacy. Only about half of Americans are considered financially literate based on five what they considered basic questions that they asked about financial fitness.
Mark: That’s kind of sad.
Darlene: It is sad.
Mark: It’s supposed to be this great country. The President told us how good we were the other night, but maybe we’re lacking there. What would you to say to somebody listening to this, I don’t think we’re going to have any grade school kids listening to this, but we might have somebody in college, what advice would you give them?
Darlene: Whenever they are in college they’re typically concerned about student debt, about starting their lives after graduation. There are programs out there, and being in college right now those individuals are savvy technologically. Look for a program, and start implementing that program now, because there are ways for them to be able to pay for their student loans, to be able to buy a vehicle. They’re going to be starting to think about maybe buying a house, or something like that. I think that they need to start determining how they can start saving for retirement. The earlier that they can start saving the better for them.
Mark: I agree, and participate in those retirement plans offered by these employers, maybe stay in on Friday night, things like that all go a long way. Once that becomes part of the routine it carries on, and that’s just what happens.
Darlene: Right.
Mark: Before we wrap up there’s a question I need to ask you that we ask all of our guests, so don’t feel bad we’re picking on you. If you could have one super power what would it be?
Darlene: I’m not sure this really constitutes being a super power, but it’s something that I don’t have, so therefore it’s a super power.
Mark: Okay.
Darlene: It would be to have vision into the future, because everyone always says that hindsight’s 20/20.
Mark: There you go.
Darlene: I think that having the ability to see into the future, and the knowledge to make the right decisions based on what I’m seeing in the future would be a great power to have.
Mark: That is a good super power. I was getting a little worried when you said vision, cause we had Kyle Stemple at x-ray vision, and we cut him off right away. I appreciate that you clarified your super power there.
Darlene: I appreciate you putting me in the same category as Kyle, thanks.
Mark: Thank you for joining us today Darlene, and thank you to our listeners for tuning. You can find more information about retirement readiness and financial fitness on our website at www.reacpa.com/podcast. Don’t forget to subscribe to unsuitable on iTunes or SoundCloud. Until next time, I’m Mark Van Benschoten for Unsuitable on Rea Radio, encouraging you to loosen up your tie and think outside the box.
