Scorning Free Money
Turning Down Fringe Benefits
By Daniel Muniz
In the large mortgage bank I once worked at, I was delighted at
being given company stock. It was the first time I ever owned stock
from a corporation and I was even happier because it was free.
Granted, it was only 25 shares of stock per year. Some of my
co-workers scoffed at it because they were accustomed to getting
thousands of shares from the firms they worked for in Silicon Valley.
However,
they still took the free stock.
For me, I was enthralled at my first venture into the ownership
society.
My former employer also offered a separate but generous
stock purchase plan. Based on your level of employment, you were
entitled to a specified number of shares at a discounted purchase
price. And
the beauty of this plan was that you only needed to put down one hundred
dollars of your own money because all future dividends were to be
reinvested to pay off the remaining loan balance.
Consequently it would take several years for the stock purchase plan to be
completed but you would ultimately own a certain number of shares
for only putting down one hundred dollars. For such a miniscule
investment, that was a great deal.
However, I was surprised by the hostility from
a number of other co-workers from many different departments.
Many employees blatantly scorned the idea of the stock purchase
plan because it would take years to eventually own the shares
outright regardless of the fact that it only involved putting down one
hundred dollars as a down payment. With the passage of a few years you could end up
with stock that could potentially be worth several thousand dollars.
But what baffled me the most were the employees who also refused
to accept the free shares of stock.
One comment I often heard from these co-workers was:
“You have to pay taxes
on the dividends.”
Hmm, my fellow co-workers had no problem with paying taxes on the
earned income of their paychecks yet they were completely
uncooperative with paying taxes on unearned monies. Something was
definitely amiss with this logic especially among people who worked
in the financial sector of the economy.
However, perhaps some of the mystery could be
explained by a survey from the benefits consulting firm Hewitt
Associates that detailed the following:
●
Only 2 percent of workers said they are very
knowledgeable about investing.
●
Half said they were "less than knowledgeable or
not at all knowledgeable.”
This kind of foolishness and lack of knowledge makes me cringe especially with my
former co-workers since they were all eventually laid off when the
parent company sold off that site to another firm that closed it
down. Some of them could have really used the freebies from my
former employer if they were a bit more knowledgeable about owning
stock.
And it wasn’t my employer’s fault because myself as a degreed
accountant, I felt that they did a thorough job in explaining the
benefits of the free shares and stock purchase to everyone. For
these people, it was either stubbornness, laziness, or suspicion
that repelled them.
I only worked at that mortgage bank for a short length of time so
I was eligible for the stock benefits for two years. As time passed,
I sold the freely given stock for about $800 to help pay for one of
the a particular item of my wedding. That "free" cash came in handy.
And I also sold the shares from the stock purchase plan for a few
thousand dollars, which I used as portion of my down payment for my
first house. Although the stock was not sold for the full amount
since I still had a loan balance, I felt it wasn’t bad deal for only
putting down two hundred dollars of my own money. Again, that "free"
cash came in handy.
Granted, this freebie was nothing compared to
the kinds of generous fringe benefits offered by other companies
especially from Silicon Valley but free is free. And I don’t mind
free things ending up in my pocket. And overall, I felt that I truly
benefited from this gift and I wished that the many people I knew at
that bank had taken the opportunity of accepting free and discounted
corporate stock.
But how can society improve the knowledge and
wisdom of finances?
How often do people turn down free stock or not maximize their
401(k) matching?
According to the research performed by Hewitt, it happens more
often than we realize.
Employers can only do so much in educating
their employees even though a lot of criticism is often heaped upon
them. Overall, employees themselves need to gain a better
understanding of the financial world. Only an enhanced comprehension
of finances will help people understand a good deal when they see
one.
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