It’s no secret that Americans are financially stressed. With 72 percent of them living paycheck to paycheck and an average household debt load of $130,922, sleepless nights worrying about money have become part of the cultural landscape.
But what does it mean for employers when that stress inevitably spills over into the workplace? On average, according to a survey by Society for Human Resources Professionals, employees’ money worries impact their productivity, ability to focus, absenteeism, morale, and overall health, at an average annual cost of $750 per financially distressed employee.
“If you’ve got 100 employees, at a conservative estimate, 52 percent of them are severely financially stressed,” says Harj Gill, CEO of Yelm-based Financial Smartness. “Look at the cost to you as an employer.”
In the age of credit cards, budgeting is not an option many people want to consider. “Everybody wants to get out of debt, but no one wants to cut back on what they’re spending and no one wants to budget,” says Gill [left in photo.]
With that in mind, he and his business partner Jeevan Anandasakaran [right] created Financial Smartness, a forecasting tool that helps individuals to understand how their current financial choices impact their future ability to pay off mortgages, get out of debt, or save up for meaningful purchases.
“It’s a financial GPS system,” says Gill. “In order for you to get to where you want to go, first you have to know where you are. Then, [our] system empowers you to make smarter choices to get to your destination. We’re not asking you to cut back anything. We just want you to work smarter with the money you already have.”
New user accounts come pre-loaded with an average consumer debt load and an assumed $50 set aside per month to pay down that debt. “We want people to put their information into the software and play with the numbers,” says Gill. “They can see that their situation isn’t that different from a lot of others’.”
The key difference between Financial Smartness and other budgeting tools is the ability to factor in ‘what if’ scenarios, says Anandasakaran.
“A lot of the applications that hook into people’s bank accounts show exactly what you’re making, but they don’t do much more beyond that,” he contends. “What if your income changes in six months or one spouse doesn’t want to work any more? What if you buy a new car or even a home? What if you want to send your child to college in 2020? With this system, you actually get to see what that looks like.”
“What ifs” also include the potential for unexpected expenses down the road.
“Let’s say your refrigerator breaks down in July 2022,” says Gill. “You can plug in those numbers now. If there’s no cash flow, not enough money in the bank account and not enough income, it will put up a red flag and say, ‘You don’t have enough money to accommodate this expense.’ What can you do now to avoid that problem in the future? That’s the power of Financial Smartness.”
For user Anthony Priest, the system made the process of buying his first home less daunting.
“It’s nice to have concrete numbers out in front of you so you can play with different scenarios,” he says. “It completely changed the way I look at my finances. Purchasing a home is such a scary endeavor. It’s overwhelming. If you’ve got this tool, you can look at it and say, ‘It’s going to be OK. I can make this happen.’ “
The bestselling author of “How to Own Your Home Years Sooner & Retire Debt Free,” Gill founded a company in Australia based on a key banking principle that your mortgage is calculated on a daily balance. As word of the concept spread, he was featured in financial publications, including Personal Investment magazine, and Australian banks began to create new home loans specifically for customers who asked for products based on his mortgage acceleration system.
After moving to the U.S. in 2003, he joined forces with Anandasakaran, a software engineer and graphic designer who began his career with Amazon in 1998 and is a founder of Wave Networks Web hosting service.
A passionate advocate of financial literacy in schools, Gill envisions families coming together to use this system as an educational tool.
“Set up your children with their own accounts,” he says. “Now, the responsibility comes back, and we’re educating people to not only empower themselves, but also to pass on this knowledge to their children and help them understand the time-value of money.”
“Employers have the most to benefit by financially de-stressing their workforce,” says Gill. In the meantime, the Financial Smartness system is available to employers as part of an employee benefits program for an initial set-up fee of $500.
“We don’t charge anything else after that,” he says. “Once we set up a master account for a company, they can then setup accounts for all of their employees.”