How to help employees build financial resilience for the long term in the wake of coronavirus
In April, 42% of those surveyed by the Office for National Statistics felt their household finances were likely to worsen during the COVID-19 pandemic, suggesting that they are now experiencing increased financial pressure compared with three months ago. In addition, during the peak of the outbreak, the average UK household disposable income will fall by £515, according to the Centre for Economics and Business Research.
This has meant that more and more are now turning to forms of credit, with 19% using a credit card to cover necessary expenses within just the first month of lockdown.
Organisations looking to help their staff recover from the outbreak need to look at how they can start to build financial resilience for the long-term, to help recovery but also build resilience for the future.
The key elements of a strategy that builds long-term financial resilience
Available to all
Those that have used credit to cover costs during the outbreak are often the ones that need help the most, but are least likely to get access to it. By making sure your strategy is inclusive of everyone, you can help to break the negative cycle of financial exclusion.
It’s important that employers don’t make too many assumptions about what their people need or inadvertently create exclusion.
Available at the right time
Just as it needs to be available to everyone, your programme also needs to be available when it’s needed most.
We know that payday lenders target the most vulnerable in the final days of the month. Access to tools and information every day of the month, when they’re needed most, can provide suitable alternatives, avoid the use of high cost short-term credit, and promote positive outcomes for the employee and employer.
Must be accessible
Any programme must be delivered in a way that meets the needs of employees. Providing a variety of delivery channels from websites to apps, webinars or workshops and one-to-one sessions will cater to the diverse needs of your workforce. Delivery via a number of channels also shows your employees that you care and respect their individual learning styles.
Include independent financial guidance
Empowering employees to make informed decisions when it comes to their money should only be done through independent financial guidance. An unbiased partner can help to protect the employer and help employees feel more confident about the quality of information they’re receiving.
Doesn’t increase employee debt in any form
The need to access credit has been a reality for many during the outbreak. However, at this stage, encouraging debt shouldn’t be a part of a financial wellbeing strategy seeking to improve the lives of employees. Borrowing money won’t change behaviours or reduce financial stress but knowing all the options and feeling empowered to make the best individual decisions will.
Promote good saving habits
Helping staff to recover from the immediate effects is the first step. Any strategy looking to help build financial resilience for the long term needs to start encouraging good savings habits so that, should anything significant like this happen again, employees won’t need to turn to credit to get by.
Building financial resilience isn’t the same for every organisation, but this checklist can help you to start off on the right path and build long-term financial security for your workforce.
This article is provided by Wagestream.
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