The fact that there is not a job for life anymore means an inability to plan the very long term, which means employers now need to help employees think differently. A lack of financial awareness coupled with a more changeable work life means a significant impact on an employee’s short-, medium- and long-term finances.
What can employers do to support these members of staff if they are failing to protect, or are unaware of the risks to, their financial wellbeing? Firstly, think differently; do not wait. At induction, help employees think of this new job as a new financial start. This is about heart and head. Help employees address their knowledge, behaviours, and emotions around money.
Explain the government help available and the benefits on offer. This is so much more than giving a benefits guide or opening a flexible benefits window. Helping employees build on the medium and long term will help them understand the importance of future. They will also remember who helped them detox their money behaviour and the employer’s brand image will benefit in the long run. Avoid a ‘this is your pension and benefits’ session and instead have a ‘this is a good time to start a new relationship with money, which means a happier financial you’ session.
On top of short-term budgeting support, employers can help staff to clean up their credit rating, which can be damaged by too many house moves, frequent changes in circumstances and debt. Show that this can be improved by stability and simple actions; this should then help employees reduce the cost of their debt, which, in turn, makes them better able to save and protect themselves from emergencies. Adding in the benefits a good credit rating has on those that want to buy a home, coupled with Lifetime individual savings account (Lisa) information or Help to Buy, will make an employee more likely to stay with the organisation, thereby reducing recruitment costs.
Most employees are not aware they need to clean up financially before they start the mortgage process to get the best mortgage deal. This sort of help can save them a lot more than the extra few pounds they may get per week at their next ‘gig’. Overcoming immediate gratification versus shaping a career and future will benefit the employee’s bottom line, and the business’.
Aiding the workforce to grasp that multiple job changes will affect their pension fund, and demonstrating that they can address this issue now they have joined the organisation is another great way to empathise. This is about being financially well, but also career-well. Be open about the “what if I leave” benefits loss and how this could affect employees in the long term. Look at how difficult the pensions industry finds getting individuals to look at their future selves, and it is clear why employers must start with the today plans for this section of their workforce.
According to research by debt charity StepChange, published in September 2014, more than seven million people lose sleep due to debt worries. Let’s get a happier, healthier and more productive workforce by tackling common money issues.
Jo Thresher is director at Better with Money and author of What’s your excuse for not being better with money?