09 Apr 2019

How employers can start young workers off on the right path with back to basics money advice

Increasingly, employers are picking up the slack and helping younger workers learn to manage their money. Some schools are now teaching children about personal finance. But your younger workers could have missed that boat - evidence shows they're suffering for it.

Recent research paints a worrying picture. They’re not emerging fresh from school or university as savvy savers and informed investors. Instead, according to Neyber’s DNA of Financial Wellbeing, 70 per cent of the under-34s frequently borrow money to pay day-to-day living expenses.

It’s not just their problem, it’s yours
Think your younger workers leave their money worries at home? Think again. 45 per cent also say financial anxiety affects their performance at work. This can mean reduced concentration, lower productivity, and higher absenteeism.

If you’re not getting the best from your workers, then your business might not be performing as well as it could.

So what can you do?
Many forward-thinking employers have tackled the issue head on by launching financial wellbeing programmes. It’s not a fad and you don’t need to worry about employees dismissing it as a gimmick. In fact, over three quarters of employees think financial education should be offered in the workplace.

And you benefit too. Employers who provide financial wellness programmes find recruiting and retaining talent easier than others. You also save more with your benefits spend. A recent study by Barnett Waddingham showed that every £1 spent on financial wellbeing had more impact than an equivalent salary increase.

What does a good financial programme look like?
To help your employees, you need to start where they are:

What areas do they want help with?
What are their priorities? Is it debt, budgeting, building a house deposit, or perhaps saving for children?

Find out by asking them. Once you know their needs, you can put together a financial education programme to address them.

Typical sessions that work well are:

Debt management programmes
Short and long term savings plans
Retirement and investment planning.

Whatever you opt for, it’s important you follow up afterwards. That way, you can find out if you’ve made a difference. You can choose to partner with an expert company that provides financial education or do it all by yourself.

Offer wider savings options that are relevant to younger workers
Improving employee financial literacy is a great start, but not enough on its own. Younger workers can manage their finances on their terms when employers offer a range of flexible workplace savings products:

The Lifetime Individual Savings Account (LISA)
Many young workers dream about getting on the property ladder but worry it’s getting harder all the time. With the LISA, they can save and invest for their first home or later life. It’s targeted right at their age bracket: you can only open a LISA if you’re between 18 and 39. Depending on the type of LISA, they can choose to save cash or invest in the stock market. You can contribute up to £4,000 each tax year without paying tax on future returns and receive a 25 per cent government bonus, up to £1,000 per tax year. Tax rules can change and benefits depend on circumstances.
More investment choice in retirement planning
Automatic enrolment has brought millions of young workers into pension schemes. They’re used to choice in most aspects of their lives, but many pensions simply don’t offer the range of options they’ve come to expect.
Employers can address this by offering pensions with a wider range of investment options. When they do this, they often see greater employee buy-in and engagement. For example, 59 per cent of younger workers in our workplace pension have engaged in some way e.g. increased their contributions, registered for online access.

A competitive edge
Young people offer unique skills, new ideas and an enthusiasm to the workplace. It’s without a doubt they are an invaluable asset to the workplace.

Helping them with their money worries won’t just improve their productivity and engagement, it’ll also enhance your reputation as an employer of choice – helping you attract and retain the best talent.

It should be remembered this article and our research provides useful information but it is not personal advice.

This article is provided by Hargreaves Lansdown.

If you'd like to hear a lot more on the topic of employee wellbeing, and also specifically from Hargreaves Lansdown, then sign up for Employee Wellbeing Congress on 22 June in London, where they'll be exhibiting.