BASE^® Blog

Financial creep occurs when employees' standard of living rises with their income, turning luxuries into necessities. Employers can help mitigate this by introducing Lifestyle Spending Accounts (LSAs) to support employees' financial well-being.

What is Financial Creep? Financial creep happens when employees spend more as they earn more, often without realizing it. This can lead to financial instability despite higher incomes.

The Role of Employers While salary increases attract and retain talent, it's up to employees to manage their spending. Employers can assist by offering LSAs, which provide reimbursements for services that promote financial stability.

What are LSAs? LSAs are employer-sponsored accounts that reimburse employees for activities and merchandise that enhance physical, financial, and emotional well-being. Unlike traditional benefits accounts, LSAs are flexible and not tax-advantaged.

Growing Interest in LSAs According to a WTW survey, 7% of employers currently offer LSAs, with 38% planning or considering them by 2025. LSAs can cover financial planning services, seminars, home purchase expenses, and more.

Benefits of LSAs LSAs help employees manage their finances better, reducing financial stress. They also offer physical and emotional benefits, making them a versatile tool for employee well-being.

Implementing LSAs Employers should evaluate their current benefits and consider replacing underutilized ones with LSAs. Questions to ask include:

• Are current benefits providing value?
• Can LSAs replace less effective benefits?

LSAs offer a broad spectrum of benefits, supporting employees' financial, physical, and emotional well-being. For more information, contact BASE at 1-888-386-9680 or visit BASEonline.com.

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