Finances are the #1 ranking cause of stress, according to a recent survey by CreditWise. And for half of Americans, this financial stress threatens work productivity and professional longevity, with nearly 47% of Americans unable to afford an unexpected $250 expense. Car breakdowns and emergency medical bills often lead people with no other financial access to high-interest debt products like payday lenders or credit cards.
An employee’s financial stress has a significant opportunity cost to the overall success of a company. Employees under financial stress miss work more often, are more distracted during work hours and are more likely to leave for a job with increased wages. A single employee in financial stress can cost a company nearly $18,000. On the other hand, employers investing in benefits like employee emergency savings accounts experience higher retention and better marks on company culture.
Only 52% of employees have access to 401(k) programs, and less than that can afford to participate even if their company offers it. In 2020, UPS set up a rainy day fund to enable its employees to deposit 5% of their pay into an account for investment, similar to a 401(k). While UPS employees can access the emergency fund within a day or two – much quicker than a traditional 401(k) loan – UPS doesn’t match the contribution. Yet, most smaller companies cannot afford to offer 401(k) programs or create the infrastructure to support an in-house employee savings program.
Enter: Sunny Day Fund.
Sid Pailla built Sunny Day Fund to bridge the benefits gap for smaller employers and to aid employees with an active savings strategy. On Sid’s platform, employers match employee savings contributions in an emergency savings account that is immediately accessible by the employee. Sunny Day Fund incentivizes employees to keep saving by showing how much more they can earn by keeping funds in the account (the more you save, the greater the matched dollar amount). This incentivizes core users to withdraw from their savings account only when necessary rather than spending the cash on non-emergency items. Sunny Day Fund targets employers with employees making between $30,000 to $75,000 annually, including manufacturers, retailers, and hospital systems. Early results are promising:
- 50%-65% of employees are voluntarily participating
- Frontline employees are saving nearly $50 per bi-weekly paycheck on average
- In a warehousing employer using Sunny Day Fund, there was a 25% lower turnover rate in participants through the Great Resignation
Sunny Day Fund has also helped bring more employees into benefits presentations, yielding better benefits communications around the core health and retirement offerings.
Sunny Day Fund is carving out a pathway to help hourly workers save and to show the value of accruing incremental savings over time to help them avoid crippling debt from future expenses. After launching its first pilot with 50 employees in 2020, Sunny Day Fund now works with dozens of companies providing emergency savings and financial well-being for thousands of employees. Sunny Day Fund raised $2.5M from venture capital investors in September 2021 to grow its team and scale in the small business market.