Why financial wellness is a crucial part of your employee wellbeing strategy

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Poor financial wellbeing can negatively impact employees’ ability to be productive at work, so employers need to up their game when it comes to supporting their staff in this area.

Financial wellness encompasses a range of elements and these vary from individual to individual and will change over time as their circumstances and needs change.

To be financially well does not mean being wealthy; it is about people feeling in control of their money, being able to meet their financial needs now and in their future, being resilient to unexpected costs and feeling able to make financial choices free of worry.  

It’s a consideration for employees at all stages of life and wealth levels, from those struggling with debt to those saving for retirement.

Poor financial wellbeing doesn’t just affect individual employees - it also hurts business performance. It leads to a lack of productivity, from staff being distracted by money worries to lost days as the stress takes a physical or mental toll.

When tackling financial wellness, building a strategy that really resonates with your employees and creates positive change for them is essential.

For some organisations it’s not possible to introduce a full programme that addresses every need straight away. Getting started could be about prioritising the areas of key risk, biggest impact or to address what’s most pressing for your workforce.

Alternatively, it may be right to start with a pilot to gauge response, build engagement and to give an organisation the insight to build a business case for expanding this to a wider programme.

The role of the employer

Whatever the starting point, the workplace is a great way to reach large numbers of employees and help them to improve their finances. An employee’s reward and benefits provides the single largest opportunity to improve financial wellbeing.

Employees trust messages from their employer and they are already used to getting information about their salary, pension and other benefits. Employers are able to procure a range of valuable benefits and in the majority of cases at more preferential terms than individuals would be able to arrange themselves.  

Helping employees to better understand and plan their day-to-day finances has three key advantages – they will feel more in control, be able to cover unexpected expenses, and save more for the future.

Via the workplace employers can not only arrange financial education, but can also ensure a successful financial wellness strategy they will provide access to advice and implementation solutions so that employees can get the help they need and take action make a positive change to their finances.

For a fully integrated hire to retire strategy there are a range of solutions, but some examples include access to debt counselling via an employee assistance programme, a link to a savings and investment portal to enable regular ISA savings alongside pensions and budgeting and pension modellers so employees can check their finances are on track.

No one is immune to money worries and it’s dangerous to make sweeping assumptions: 19% of high earners worry about money, and on average 18-34-year olds are the group that save the most (£286 per month).

Whatever strategy you put in place, it pays to ensure employees can identify and to access whatever help they need irrespective of age or wealth level and that it caters to their changing needs over time.

Planning and budgeting

Before getting started with developing long-term solutions, it’s crucial that employees understand their finances, and their subsequent budgeting potential – budgeting and planning are the cornerstone of better financial wellbeing.

Everyone knows an ‘arranger’ - it’s the person who organises all the social nights out, has their summer holiday booked months in advance and never has a meeting out of place in their diary.

Equally, most of us will know a ‘drifter’ – that friend or colleague who seems to exist in an eternal fog of confusion, and yet somehow manages to just about get by.

Most of us would probably put ourselves somewhere in the middle. We might appear focused and organised at work, while our social life looks like complete chaos, or vice versa.

Having a financial wellbeing strategy is a clear signal of your intent as an employer and an inspiration for all your staff to think differently about their finances.

While it’s true that some people find being organised easier than others, getting better at it and establishing habits that work for us as individuals is as much about practice as it is about natural inclination.

The same can be said of financial planning and budgeting. These are essential skills for everyone, and while they do require regular, ongoing commitment, the basic techniques are easily learnt.

Helping employees to better understand and plan their day-to-day finances has three key advantages – they will feel more in control, be able to cover unexpected expenses, and save more for the future.

That doesn’t just apply to low paid workers. Employees on higher salaries can also benefit from getting into better financial planning habits.  

Being more in control

The adage ‘what gets measured gets managed’ holds true when it comes to financial planning. If someone doesn’t have a clear picture of their income and outgoings, it’s difficult to find places to cut back on expenditure, stay within financial limits and ultimately feel in control of their money.

While understanding day-to-day expenses is a part of this, there are other ways that employees can make sure they stay in control.  

These could include switching utility providers or regularly reviewing subscriptions to online services, weeding out those that aren’t being used any more or don’t offer good value.

Covering unexpected expenses

A bigger than anticipated car repair bill or a leaking roof can put a real dent in an employee’s finances. Helping them to create a safety net that will protect against financial surprises is a key benefit of building a good planning and savings habit.

If employees do have to borrow, then helping them to access loans as the lowest possible cost and repay them in the most effective way is also essential.

Saving for the future

Being in control of today’s money and feeling confident about covering unexpected outgoings puts employees in a much stronger position when it comes to saving for the future.  

Planning and budgeting can mean the difference between a well thought-out short, medium and long-term financial plan and a vague sense that things might be OK in the future.

Practice makes perfect

Like any activity, the more someone practices planning and budgeting, the better they will get at it, and the more it will become an integral part of their everyday activities.

Employers can help with this by offering regular support. A one-off budgeting workshop is a good start but helping people to create a long-term planning habit will reap even greater rewards.  

That could mean providing access to good quality budgeting tools, credible websites with money-saving tips, and face-to-face guidance where appropriate. Making sure that workplace benefits that help employees save money are clearly communicated and easily accessible is another great place to start.

Culture change  

Just as importantly, it’s about creating a healthy culture when it comes to money.

Making financial wellbeing part of an overall wellbeing strategy, having a range of relevant benefits and services that support employees in improving their own finances and embedding the talk about money into the calendar of regular reward and benefits communications will all make a difference.

Having a financial wellbeing strategy is a clear signal of your intent as an employer and an inspiration for all your staff to think differently about their finances. The result is a more positive and healthy life for your staff – and a more engaged, productive workforce for your business.

Want to learn more? Read The true value of financial wellbeing.

About Jeanette Makings

Photo of Jeanette Makings

Jeanette heads up the financial education business at Close Brothers and is a well-known thought leader in the UK financial wellbeing space. She has spent her whole career working with UK businesses; first with Arthur Andersen and Ernst & Young and for the last 18 years she has focussed on providing financial education and advice programmes to some of the UK’s best known employers.

Jeanette is passionate about helping employers to make a difference to employee financial wellbeing by providing financial education programmes that are accessible, that address all personal financial issues, not just debt or pensions and that inspire employees to take action and make a difference to their lives. With all the current noise around financial wellbeing, the priority for Close Brothers is to make it easy for employers to adopt a financial wellbeing strategy and ensure it reaches all employees for optimum impact.

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