Teaching Employees How to Budget with Employee Assistance Counseling Services

Teaching Employees How to Budget with Employee Assistance Counseling Services
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The Need for Employee Budget Counseling

If you have employees, you have most likely been asked for payroll advances. Not only are these a bad idea, often even if the employee promises to allow the entire advance deducted from their next paycheck, they may have a sad story again that delays repayment. Or, if the advance is so large that you are unable to deduct the entire amount because all employees must be paid minimum wage, you may end up chasing what is due. Finally, if the employee quits (especially if you are an at-will state), you may have no avenue to retrieve the money lent to the employee.

The biggest reasons employees ask for payroll advances is their lack of budgeting skills; most say they live paycheck to paycheck. You can help by implementing employee assistance counseling services (EACS), as teaching employees how to budget will lower pay advance requests.

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How to Set Up Your EACS

Save Dollars

If you want to teach your employees how to budget, you will first need to know how to set up your EACS. Here are the steps to follow:

  • Don’t’ Make it Mandatory – Unless you offer the counseling sessions during normal working hours (which isn’t a good idea), then you shouldn’t make the program mandatory. Some employees simply won’t like the idea of you looking at their personal finances.
  • Seek a Professional – Because I have an auto dealership, my finance manager who is knowledgeable about credit, credit repair, and budgeting tips filled the need for me as the employee assistance counselor. If you don’t have someone that is good at teaching budgeting skills, seek out your economic development center or senior citizen’s center. Often, these organizations are staffed with volunteers who will work free of charge. If you use a professional or an employee to run your program, offer them a stipend for each employee counseled.
  • Set Up Convenient Appointments – Every employee will have different outside of the office responsibilities. Set up appointments when teaching employees how to budget that align with their work/life schedule even if this means before work hours, evenings or weekends.
  • Allow Partners to Attend – Often, the employee may not be the financial planner in the family unit. To help your employees best, allow spouses or partners to attend counseling sessions. If an employee lives with seniors or parents, allow them to attend as well.
  • Keep it Simple – Don’t offer services such as investment counseling. If employees request this service, hook up with a local financial planner in your community and see what they have to offer as far as free counseling services on investments or retirement counseling.
  • Offer a Confidentiality Agreement – Some employees may be wary of sharing personal financial information with the budget counselor. Use the confidentiality agreement template in our Media Gallery so the employee feels secure their information will be kept confidential.

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Use the Right Tools

Beyond teaching employees how to budget and saving on everyday expenses and general household budgeting tips, you also need the right tools for your employee assistance counseling service.

In our Media Gallery you’ll find a free Microsoft Excel Personal Budget template (in both MS Excel 2010 and MS Excel 97-2003). This easy to use personal budget template can show the employee where their money is going, if they do indeed have money left over at the end of the month, or if they are in the red at month end.

The Counseling Session – Four Easy Steps

Screenshot MS Excel Budget

Teaching employees how to budget means you must take advantage of every counseling session.

  1. Have the counselor meet with the employee and make a checklist of all the items needed to begin the budgeting process. To keep it simple, offer the Microsoft Excel personal budget template to the employee when you arrange for them to have counseling and ask them to bring in backup material for the each line item. Have them arrange with the counselor for an appointment for session two.
  2. During the second session, request the counselor to use the employee’s documentation and the personal budget template to show the employee where their money is going each month. If an employee has requested employee assistance counseling services, most likely, once the initial personal budget is completed, they will be lacking money at the end of the month. Ask that they be shown about making changes to their spending habits on the budget so their total income leaves them with a positive cash outflow at the end of the month. The counselor should ask them to follow this budget for one month and make an appointment for session three.
  3. In session three (give the employee a full month to work on the recommended budget) the counselor should compare what the employee spent against the recommended budget. If the employee has done well and has a positive cash flow at month end, they should be encouraged to continue on their own, making adjustments as incomes increase or decrease. If the employee is upside down as far as cash at month end, the counselor should advise them where they went wrong and where they overspent. Make a quarterly follow-up appointment.
  4. In the follow-up session with the counselor, they should have the employee bring in their personal budget and discuss both the smart and not so smart spending decisions. Allow a good Q&A time so the employee understands not only the importance of budgeting but can also ask questions on ways they can save money. The article Smart Shopping Tips for the Wise Consumer offers a substantial amount of savings information.

Setting up an employee assistance counseling service and teaching employees how to budget can stop the need for employee advances and employees will learn to live within their means. Often, when a person or family has a good handle on their budget and has improved budgeting skills, this will make for a happier employee who isn’t worried about how to pay for the essentials each month.

Screenshot by author MS Excel Personal Budget Template