As we say goodbye to the summer holiday season, start kicking through the autumnal leaves before the next big financial event on the calendar is upon us, Christmas! StepChange Debt Charity fears festive pressure from family, friends and shops will push financially hard-pressed families into further debt. Christmas could push millions £3.5billion deeper into debt as they turn to credit to fund festivities – but is this an issue that employers should be concerned about?
At Broadstone, we think it is. Wellbeing is often thought of as “mental or emotional” but there is a tripartite relationship between “Mental, Physical and Financial” wellbeing and they are closely connected. Financial wellbeing is often overlooked as an employee benefit and yet when people have money worries, this can impact on both their physical and mental health and as a result, their productivity at work could suffer. Employees’ poor financial wellbeing costs UK employers £15.2bn each year due to factors such as absenteeism, leavers, and lack of productivity caused by stress. Do we have your attention now?
Giving back control
The charity CABA defines financial wellbeing as ‘having a sense of security and feeling as though you have enough money to meet your needs. It’s about being in control of your day-to-day finances and having the financial freedom to make choices that allow you to enjoy life.’
Almost half of 500 HR leaders in a recent survey said that the financial challenges due to covid-19 had a negative impact on employee productivity and motivation. Over half of employees were looking to their employer for support on issues such as personal debt, increased personal costs related to working from home, and saving for retirement. It’s no surprise, therefore, that mental health and financial worries are, in our experience, the two main concerns facing your employees. In addition, your teams actually want to seek advice from you, their trusted employer, which is no doubt why financial education and engagement is a growing area in employee benefits.
Many employers have no idea of the fragility of their staff when it comes to their financial situation. A study from YBS in June of this year found that around a fifth of UK adults have less than £100 in savings with 1 in 10 people have no savings at all. It’s no wonder this survey also concluded that money worries led to lack of sleep and stress. This shows the lack of financial resilience that people have.
Contrary to the above we at Broadstone have also found that some employees had made significant monthly savings during the lockdown mainly on commuting costs and this will continue for some as working from home or a hybrid approach will become the norm. AA Financial Services did a study in September 2020, they found that 88% of UK adults have spent less during lockdown. Saving on average £49 a month on petrol, £57 by not going to pubs or restaurants, £53 by not going to shops.
With other significant savings in other areas, a total of £617 a month on average for those still receiving their full income!
Great news, but what are they doing with this income windfall? Are people making good decisions with their money? Do they understand the difference between short, medium and long-term saving? Are they aware of “the thief in the night” that is inflation, could steal even more of their deposit-based savings as we head into 2022? Do they understand risk and reward? If we can educate people when it comes to money they can make better decisions and improve their financial resilience and overall wellbeing.
The run-up to Christmas is often a good time to start introducing the issue of money management, financial planning or debt advice and financial wellbeing in general with your employees. Talk to us about how we can help support your staff and your business.