Six reasons why financial wellbeing and education is still relevant to high earners
However, our Employer’s Guide to Financial Wellbeing 2019-20 research shows that 29% of people earning £40,000 to £60,000 per annum still have money worries. What is perhaps most surprising, is that those who earn more than £100,000 per annum have the same level of financial worries as those who earn less than £10,000 per annum. Financial worry is not necessarily eliminated by pay rises.
Here are six reasons why financial wellbeing is still relevant to your higher earners.
1. Sticking to a budget is a challenge
It is a very common misconception that those who have low financial wellbeing don’t know how to budget. Our research shows that this is simply not true – fewer than 5% of those with low financial wellbeing don’t know how to budget. However, many people simply find sticking to a budget throughout the month a challenge.
Nearly one-third (29%) of people regularly run out of money before payday. A continual sense of almost running out of money creates a reduced sense of control and has a negative impact on financial wellbeing – this is true across all salary bands, demonstrating again that higher pay does not protect people from lower financial wellbeing.
2. Balancing today with tomorrow
Our research shows that the importance of saving is universally understood by all employees. Low levels of savings leave people vulnerable to life’s unexpected events. Those with low levels of financial wellbeing live perilously close to financial difficulty, with 25% of people stating that they would need to resort to borrowing within a month if they were to lose their income. When planning their savings, those with high financial wellbeing think much longer-term than those with low financial wellbeing.
3. Lifestyle creep
For many people, their lifestyle costs tend to increase as their income rises. Whether it’s comparing themselves to their peers, being seduced by relentless marketing messages or trying to meet an emotional need for social acceptance and status, high earners can end up with a lifestyle that they can’t really afford. This in-turn can cause them to under save, take on too much debt or adopt a chaotic approach to managing their finances. People who understand what really matters and what’s important to them tend to make better financial decisions.
4 Suffering in silence
People in senior leadership positions are even more likely to conceal and deny that they have money issues in the mistaken belief that this will adversely affect their career and relationships with colleagues. On the contrary, a high earning senior leader who acknowledges their financial problems and is prepared to get help and share their story with their workforce, is more likely to command respect, as well as breaking the taboo of talking about money.
5. Life events
Any household can be thrown off course financially by a range of life events – the birth of a child, caring for a relative, loss of a partner’s income or relationship breakdown. High earners are not immune from this if they have little or no savings and high fixed living costs. Building financial resilience in good times is key.
6. Leadership capability
Higher earners are usually in leadership or management roles, and as such, they set the tone and direction of an organisation’s culture and resilience. If they are suffering anxiety, depression or other mental ill health as a result of low financial wellbeing, they can’t lead and manage effectively.
Poor financial wellbeing affects employees across all pay bands, not just the low paid. Higher earners are harder to recruit and retain, and they have plenty of career choices. An employer that provides effective financial wellbeing support will be well placed to win the war for talent.
Interested in finding out more about financial wellbeing?
Have a read through The Employer’s Guide to Financial Wellbeing 2019-2020. The guide is a must-read for anyone who is interested in implementing a financial wellbeing programme over the coming year.
This article is provided by Salary Finance.
In partnership with Salary Finance Inc
We understand the impact finances have on our health, our happiness, our home life & our work life.
