Employer lends a financial helping hand
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TESS VIGELAND: Got your 401(k) match back yet? After scaling back, thanks to the Great Recession, Fidelity says many companies are reinstating the match or at least plan to over the next year. It surveyed employers that use Fidelity to manage their retirement plans.
Retirement is just one aspect of our financial lives that involves our workplace. There’s also health care, and, of course, the paycheck. But at least one business owner in Detroit is going even further in helping his workers with their money management.
From Michigan Radio, Sarah Hulett explains.
Sarah Hulett: Matt Bergstrom owns Thornton and Grooms. It’s a plumbing and mechanical business in suburban Detroit. It has just over 40 employees.
As Michigan’s economy sagged under the recession and slumping auto industry, Bergstrom noticed his employees were stressed out over the state of their personal finances. And that stress was starting to affect how they did their jobs.
Matt Bergstrom: Our guys and the gals that work for us have to be on every day, because they are in front of the customer, whether they’re on the phone or whether they’re out talking to Mr. and Mrs. Homeowner. And if you’ve got that stress of a financial burden, it makes it difficult to be able to listen and hear what the needs of the customer are.
So Bergstrom made a deal with his employees: Attend at least 10 weeks of a 13-week course on how to manage household finances, and he’d cover the cost of the class, $165 per employee. More than half his workers, and some of their spouses, took him up on the offer.
On a recent Thursday night, about 20 employees of Thornton and Grooms gather at the site of a former heating and cooling business. The building, like many in this industrial neighborhood, sports a large “For Lease” sign out front.
Inside, Bergstrom’s employees settle into folding chairs and flip through their workbooks to find tonight’s lesson.
Personal finance DVD: Please welcome, nationally syndicated radio host and New York Times best-selling author, Dave Ramsey!
The classes are essentially instructional DVDs from personal finance guru Dave Ramsey. They cover topics ranging from saving and budgeting to reducing debt and refinancing mortgages. Tonight’s topic? Investing.
Dave Ramsey on DVD: Welcome to one of my favorite lessons in Financial Peace University. We’re going to have a good time learning about something that matters. Open your books to “Of Mice and Mutual Funds.”
After the DVD, people break into small groups to talk about their own experiences.
Matt Bergstrom facilitates the discussion.
Bergstrom: Anybody have anything at the table that stuck out?
Employee: I think as far as investing goes, I think most of us are just scared, because we don’t know anything about it. You know, it’s like we were talking about our 401(k)s. A lot of us I don’t think know where our money is at in our 401(k)s.
Several of Bergstrom’s employees say the same thing: Investing is intimidating. They don’t know understand how to do it. One person says he doesn’t know where you’d even go to buy into a mutual fund. All are questions Bergstrom is happy his workers are getting answered.
Bergstrom: I look at many of our employees as they almost feel like family. You feel almost a pain for them as they’re going through a financial crisis.
Among those taking the class are Dan Prover and his wife, Michelle. They live in a compact brick ranch house in Livonia, Mich., with their two daughters and two dogs.
Dan Prover: Come on in.
Dan supervises the plumbers at Thornton and Grooms. He was all for the class, but Michelle was skeptical at first.
Dan: Well, I think right away I was like, “Let’s do it.”
Michelle Prover: I was more like, “What’s he gonna do for us? We read the books, we read the magazines, they tell you to save, save, save.” You know, it’s hard. And, I just thought it was another scam, to be honest with you.
In the end, the Provers decided to take the course, because they had been spending beyond their means and had more credit card debt than they wanted. The couple say they now realize financial management all starts with budgeting, something they’d never really done before.
Michelle: It was just, you know, spend. If it was there, it was there to use.
Dan: We did have a budget, but what our budget consisted of was basic bills that came in through the mail.
Now, the Provers budget for everything, from the dog food to what goes in their daughters’ lunches. That means fewer impulse buys. It means less eating out, and it means Dan will probably not be replacing the missing hubcaps on his car any time soon.
It also means they know exactly where their money’s going. And that’s something both Dan and Michelle say is a welcome change. Michelle says in the past, her biggest fights with Dan were about grocery shopping.
Michelle: That I’m spending too much, that “I can’t believe you’re going to the store again.”
And she says those disputes exposed deeper feelings about equity in her marriage.
Michelle: Especially for me being a stay-at-home mom, I feel sometimes like he — I felt this, he didn’t feel it — but that was, like, his money. So when he brought it home and I’m like, “We need this, and this and this,” and I felt bad about that, you know?
Michelle says there’s a lot less to feel bad about, now that she and Dan are more upfront about their household finances.
Michelle: We seem a little happier. I mean, we are happy. But I mean, I think with the budget now in place, we talk about money more. We just don’t push it under the rug. We’re both involved in the bills, and we know what’s going in and out. So it helps out.
Since they started the class, the Provers have cut up all but one of their credit cards. And Dan says he plans to get rid of that one, too, once they’ve saved up three to six months’ salary.
Prover’s boss Matt Bergstrom says based on the conversations he’s hearing at work, he thinks a lot of them are getting their finances in shape.
Bergstrom: It’s pretty neat around here to hear people talk about “Hey I’m not using credit cards anymore,” “I cut up my credit cards” or “I’m paying down this debt” or “I’ve gotten that debt handled.”
Bergstrom says at least one of his employees who opted not to take the class now wishes he had. Bergstrom says that employee isn’t the only one with regrets, so he’s planning to offer the course again later this year.
In Livonia, Mich., I’m Sarah Hulett for Marketplace Money.
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