By: Nic Hayes
With 78% of Americans living paycheck to paycheck and 90% of employees enduring financial stress, the impact on both their well-being and work performance is profound. Financial stress contributes to lost sleep, declining mental and physical health, and reduced productivity. Additionally, financially stressed employees are more than twice as likely to leave their jobs. For employers, offering a trusted financial wellness solution is no longer optional—it’s essential for addressing these challenges.
BrightDime’s financial wellness solution is designed to put employees first. Their holistic approach combines data-driven tools, empathetic financial education, and unlimited one-on-one coaching to address each employee’s unique financial challenges.
BrightDime has always prided themselves on being independent and unbiased, so they are wary of any partnerships that require them to offer products. BrightDime noticed that around 80-90% of their coaching sessions revolved around debt, but since BrightDime doesn’t sell products, they did not have a viable solution for these employees to refinance this debt at a lower rate. For most working Americans that are sub-prime, their open market options for unsecured credit are payday and title loans which can reach north of 200% APR.
To help employees break the paycheck to paycheck cycle, BrightDime partnered with Kashable, a provider of low-cost loans. Unlike predatory options, Kashable provides employees with access to loans with an APR in the high-teens to low-twenties—significantly reducing their financial strain. Additionally, they report to the credit bureaus, so if an employee pays them back within one year, they could increase their FICO score by 45 points. Therefore, financing through Kashable can help employees improve their credit score and reach their financial goals alongside BrightDime’s coaching.
On the partnership, BrightDime CEO David Stedman said, “We didn’t like not being able to offer this to employees when they needed it. You know, a lot of high-cost credit cards or payday loans are perfect examples of where Kashable can come in and provide that solution and BrightDime cannot. We would always work with these individuals and try to figure out how to get them out of debt. So, it solved a big problem for us, is a great partner for us, and allows BrightDime to keep with its mission of always doing right by the employee.”
From Debt to Savings
Compounding the fact that 78% of Americans are living paycheck to paycheck, one-third of Americans have nothing saved for retirement. And many more are severely limiting their returns on their retirement savings by taking a loan or withdrawal from their 401(k).
For many employees, when an emergency comes up, they turn to their 401(k) instead of the more expensive title loans and credit cards. However, they are often unaware of the pitfalls that come with borrowing from their 401(k). For one, there could be a 20% loss in potential savings every year by keeping your money out of the market. There are also fees involved with a 401(k) loan, and a federal tax penalty could be incurred if it is not paid back.
A particular client brought in BrightDime specifically to address the issue of employees borrowing off the 401(k) as David Stedman recounts, “We had a client that basically said, ‘Here's what we want you to do. We want you to reduce borrowing off 401(k).’ They basically had a run on their 401(k)s. They had mandatory participation which was great for many, many years because every one of their employees had a very large balance in their 401(k). At some point somebody heard that you could borrow off that and it spread like wildfire. So, they brought us in to help with that. And it's recently been becoming a bigger and bigger issue because people are so used to debt these days.”
Through their partnership, Kashable provides employees with a lower-rate loan alternative in these emergency situations to steer employees away from drawing on their 401(k). On their solution, Jameson Fauver, VP of Business Development at Kashable said, “Kashable steps in as this intelligent alternative to the 401(k) loan during emergencies. We reduce 401(k) loans anywhere from 25 to 35% once we're implemented for over six months.” These loans are then paid back via a payroll deduction helping employees stay on track. Once employees have paid the loan back, they can choose to continue to have the payroll deduction and have it put in emergency savings. With a continuous payroll deduction and expert coaching from BrightDime, employees are conditioned from debt to savings, helping them ultimately break the paycheck to paycheck cycle.
As financial stress continues to challenge employees and employers alike, BrightDime’s partnership with Kashable offers a proactive solution. By providing access to lower-cost loans and expert financial coaching, this partnership not only helps employees tackle high interest rate debt, but also sets them on a path toward financial security. Together, they offer a sustainable way for employees to shift from managing debt to building savings, benefitting both their personal wellbeing and their workplace productivity.
We are proud to feature BrightDime on the Granite List.