By Gethin Nadin – Director of Ecosystems
Over the last couple of years, Financial Wellbeing has made its way to the top of the HR agenda. What has traditionally been viewed as a sensitive and personal subject is now coming out onto a more public platform, and the responsibility of a person’s financial health is falling on more than just the individual’s shoulders.
Why can’t you afford to ignore financial wellbeing?
Some stats for you:
- The average rent in the UK has increased by more than 10%
- This rent is hitting almost £1,000 per month
- 50% of renters think they will never be able to afford their own home
- The income-to-debt ratio for 17-24 year olds is 70%. Your young staff are swamped by their own debt
- 40% of British families don’t have enough money for a socially acceptable standard of living.
- One-third of your older members of staff lose sleep over not having enough for retirement.
- 40-55 year olds house sharing is up by 300%
- The cost of retirement is set to increase by 150% by 2025, and almost half your employees will not have enough money to retire. The reality is that the retirement age will soon be close to 70.
So, looking at all these facts and figures, it comes as no surprise that people are feeling a bit financially stressed, and are having a tough time coping with the repercussions.
OMG! LOL! BRB! APR?
Nationwide surveyed 2,000 people, and although 79% of participants knew what abbreviations such as LOL mean, only half correctly guessed the meanings behind financial terms such as APR and PAYE.
A lack of basic knowledge and understanding seems to be a huge contributor to the detriment of an individual’s financial wellbeing. Misinterpreting terminology such as APR is leading people to put trust in payday loan companies and increase their debt further.
So, why should employers be concerned with this?
Well, 70% of your employees think about their finances while working, and one-third of your employees admit that financial concerns prevent them from achieving their best at work. Ten per cent of your teams will have actually taken time off to deal with financial issues. Half of your employees want help with financial decisions, and in the last 10 years there has been a 50% increase (across a multitude of industries) in employees identifying themselves as struggling financially. That’s a huge chunk of your workforce who are worried about the state of their finances, and are bringing those concerns with them to work.
What will you get out of implementing financial wellbeing initiatives?
It will come as no surprise to you that your employees like to see that you care. In fact, three quarters of your employees will get more satisfaction from working with you, and 66% will be more loyal. In a nutshell, loyal employees are happier, more productive, and will go the extra mile for you. Essentially, there is a direct correlation between financial wellbeing initiatives and a positive result for you as employers.
Is the advanced tech really necessary?
Nobody really goes to banks anymore, do they? Banking apps and online updates minimise the ‘chore’ of keeping an eye on our finances, and this financial technology is widely accessible to an ever-increasing number of your people. The problem is that banks are struggling to keep pace with the tech. As a result, 75% of employees are keen to use financial services from people such as Google, Amazon and Apple rather than their own bank. So, third-party providers of this tech are becoming more popular. If the tools are there, employees would become more accustomed to looking at their payslips, making benefit and retirement decisions, and deciding what they can do with any extra cash, all while they’re on the bus home from work. Or, they may prefer Angry Birds; whatever helps them unwind.
The point is that to develop better behaviours in becoming more financially healthy, an employee’s individual finances need to be as easily accessible, day-to-day, as their iTunes.
The journey: What are we aiming towards?
Employers are a caring bunch, and we know that 71% of you feel responsible for your employees’ financial wellbeing. At one end of the spectrum, you could have an employee in crisis; at the other, an employee might be financially comfortable. The majority will be at varying stages in between the two. As an employer, the main aim is to alleviate the complications of an individual moving from one stage to the next.
This won’t be a linear journey for anyone. Even an employee who is particularly careful with their finances will find that their financial position fluctuates when they approach different stages in life. For example, they may at one stage reach the point where they are ‘comfortable’, until they invest their capital and savings into buying a new house, which takes them back down the ladder, ready to start saving towards the next goal. The intention of financial education and financial wellbeing initiatives is to make this journey as smooth as possible.
So there you have it; if you take the time to encourage and develop your employees’ financial wellbeing, not only will you be viewed as a fabulous employer (which, by the way, goes a long way towards successful recruitment and retention of staff), but the overall financial and cultural benefits to your organisation could be invaluable! Financial wellbeing is no longer down to the individual to struggle with; you as employers are in an excellent position to keep your workforce financially healthy.