How financial education gives employees life-long support
Few people can claim to have had money management lessons at school. It’s unlikely that you – or your employees – were taught how to budget, save, or invest effectively in the classroom. Most of us simply learn on the go as we reach adulthood, trying our best to organise our finances when pay day arrived.
But when confronted by major life events or unexpected circumstances, this self-taught knowledge may not be enough to get your employees through. They may be unsure how to make the best financial decision or where to turn to for help.
Do they prioritise paying off their student loan or credit card debt, for example? Perhaps they want to buy a house, but don’t know how to get onto the property ladder. What if their boiler breaks down or their bills suddenly go up – do they have a back-up plan?
Situations like these could affect your employees at any time and put their wellbeing at risk. Not only that, it could have a detrimental impact on the wider business.
The effect of poor financial education
Poor financial education could make it difficult for employees to manage their money and make good decisions.
In fact, Standard Life’s Retirement Voice 2022 report revealed that confidence in making decisions is lower in those who don’t seek financial guidance or spend no time on their financial planning.
It could also affect people at work. Research by the Chartered Institute of Personnel and Development found 29% of employees said money worries had affected their productivity. In addition, an average of 4.9 worker days are lost each year as a result of money worries, and financial-related absenteeism is costing large organisations more than £300k a year.
The good news is that it’s never too late to learn. As an employer, you can help by creating a support package that aims to improve employees’ financial knowledge at multiple life stages. This could help them feel better prepared when facing unexpected events, and help you to build a more resilient business.
Tips to help boost employees’ financial education:
1. Support early-career employees with money management
Younger employees may be unsure how to manage their monthly incomings and outgoings, especially if it’s their first time getting a regular salary.
Help by starting with the basics. Ensure payslips easy to read, not full of mystifying acronyms. A ‘jargon buster’ guide that translates terminology into plain English could be useful.
In addition, those who are just starting out typically earn less than employees who are several years into their working life. This may make them particularly vulnerable to the rising cost of living.
Support them by signposting to internal resources such as your employee assistance programme (EAP), as well as external guidance like the government’s cost of living support hub.
Normalising conversations about money can make a big difference too, and help employees open up about any challenges they’re facing. So it’s important to encourage business leaders to break the silence and reduce any stigma surrounding financial worry.
2. Guide employees throughout the homebuying process
Employees who are looking to buy their first home are likely to have lots of questions about the complex process. The recent rise in interest rates is also likely to have an impact.
There’s a lot to think about and it could cause your employees mental and financial upheaval. It’s well known that moving house can be one of the most stressful events of a person’s life. And increased stress and financial worry could lead to a drop in their productivity and performance at work.
Help reduce the impact buying a house can have on employees by providing useful information that helps simplify the process. Signpost to resources that aim to answer those frequently asked questions and walk employees through each step. The more knowledge employees have, the more likely they’ll feel reassured and prepared.
3. Help employees with pension planning
Standard Life’s Retirement Voice report uncovered that most people (72%) do little or no planning for their retirement.
One reason could be that the planning information out there puts people off. Indeed, the report shows that 50% say they find information about pensions overwhelming and 41% don’t know what to do with it. The need for simple, digestible content is loud and clear.
Spending time planning for the years ahead is particularly important for employees who are getting closer to retirement. Help by signposting them to information that’s designed with ease in mind, such as MoneyHelper or The Money and Pensions Service. These include tips on topics like how to combine pension pots and how tax in retirement works.
For more information on financial wellbeing, including resources on how you can help support your employees, take a look at Standard Life’s Financial Wellbeing hub.
Supplied by REBA Associate Member, Standard Life
Standard Life are part of Phoenix Group, the UK’s largest long-term savings and retirement business. We both share an aligned ambition to help every customer enjoy a life full of possibilities.
