How to engage employees in their finances to reduce stress
The Money Advice Service recently found that more than 16 million people in the UK have less than £100 in savings. While recent research from Barclays of 100 UK employers, nearly half of employees worry about their finances, 20 per cent avoid thinking about their finances because they find it upsetting and 18 per cent lose sleep due to financial stress.
What are the ramifications for employers? PwC’s employee financial wellness research highlights that of those employees who are stressed about their finances, 48 per cent are distracted at work and 50 per cent spend three or more hours a day dealing with financial matters. Lost productivity resulting from financial-related stress in the workplace is believed to equate to four per cent of UK employers’ bottom line, totalling almost £19bn.
The causes of financial stress
The CIPD’s financial well-being research shows that the biggest causes of stress and detractors from positive financial well-being are:
1) Only just earning enough money to get by.
2) Associated hassles involved with saving.
3) The time it takes to manage money.
4) Difficulty in interpreting financial jargon.
Another key factor we face is the use of technology in our daily lives, making it easier to spend the little disposable income we have left after rising living costs with the click of a button. Social media bombards us with images promoting celebrity fashion lines or their favourite holiday spots, subconsciously draining our willpower to save. It’s unfortunate that celebrities don’t post about their retirement goals and share the financial planning advantages they are getting by paying very large fees to tax planners and financial advisers.
Despite all of this, some published reports still do not identify people’s finances as a root cause of stress in the workplace and tend to focus more on internal work activities, such as Acas’ stress at work report. This leads us to ask whether enough focus is placed on helping employees with stress at work that is driven by external factors, as well as work-related activities.
How to ease financial stress
What does this information tell us and what can be done to help ease the effects on financial stress on productivity in the workplace?
I’m sure we all know the saying, ‘give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.’ It simply isn’t possible to just pay off all our employees’ debt and give them extra money to booster their savings pots, in addition to the rising costs of pensions auto-enrolment minimum contributions. It is far more achievable and cost effective to educate them on how to manage money and make available solutions that help people get into better financial habits.
Financial literacy is a major problem. Financial planning has only very recently started being delivered in schools and financial advice is only readily available to those who can afford it. So how can we help our employees to learn healthy financial habits, when there is such an impetus to spend?
Providing financial education programmes, especially to our younger workforce, should be a primary objective. This would empower employees to understand simple things from how budgeting money works and getting best value from energy suppliers, to understanding how much we need to put away now to afford the things in life that matter to us most; buying a house, family planning and retirement. Education can be delivered both online and during face-to-face in seminars, making it easier to address all employees in an increasingly changing work environment.
Improving the financial journey
As well as helping to educate, we can make doing the right thing easier for our workforce, by including financial wellbeing products in our benefits packages to support employees at all stages of their financial journey. We can assist our employees in achieving their savings goals by providing workplace ISAs that can be funded through employee net pay, to help support better savings habits and reduce the risk of spending before you save.
We are seeing some innovative employers allow pension funding to be directed into alternative savings products such as ISAs, to help employees achieve goals like buying their first house. This re-direction of pension budget receives greater recognition, appreciation and engagement with employees.
Additionally, debt consolidation products can be used and positioned by third parties to help reduce the cost of debt associated with using pay day loans found on the high street, where APR is typically set at a four-figure percentage rate.
It’s now time to prove financial stress as a cause of stress in the workplace, and empower employees with simple education and savings tools to make good financial decisions.
Author is Ben Hollingdale, head of sales at Smarterly.
This article was provided by Smarterly.
In partnership with Cushon
Cushon is an online savings&investments platform provider, offering holistic workplace savings.
