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08 Nov 2019
by Tracey Ward

Six ways that financial education can help employees be more money savvy

It’s not easy to be effective at work if you are worried about making ends meet at home. More than three quarters (77%) of employees with money worries say their performance at work is affected as a result, according to the Close Brothers’ Financial Wellbeing Index 2019.

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And with the same research showing that 94% of employees are concerned about their financial affairs, it’s clear employers can gain by helping their staff to manage their money better.

Offering a comprehensive financial education progamme probably represents the best way to do this.

Rebekah Gerry, head of financial education at employee benefits provider Neyber, said: “Workplace financial education helps to give people an extra nudge to do the right thing when it comes to their own finances.

“As employees are generally in work for 40 hours a week, it’s a good place to help get the message across.”

Here are six ways workplace education can help your employees become more money savvy.

1. Being financially aware

Failing to take positive action is one of the main reasons people end up burdened with money worries.

A workplace financial education programme can help to avoid this by regularly prompting them to examine their finances – and offering practical advice on how to deal with any issues.

“Workplace financial education helps people to make better decisions,” said Jeanette Makings, Head of Financial Education at Close Brothers. “Employees can then apply this approach to every financial decision from that point forward.”

2. Meeting short-term savings goals

Having a rainy day fund is one of the best ways to assuage money worries. Experts recommend having enough to cover at least three months of essential outgoings.

Financial education schemes can offer tips on choosing the right savings vehicle to maximise employees’ returns, whatever they are saving for.

Providing tools such as online calculators will also help people to meet their goals.

3. Saving for retirement

Less than half (43%) of employees expect to be in a position to retire when they want to, according to the Close Brothers’ report.

And while employers now have a duty to provide a workplace pension scheme, many employees remain in the dark about what that means for their finances in later life. Almost a quarter (24%) of respondents to the Close Brothers’ survey said they never review their pension.

Through financial education, employers can cut through the jargon and help employees understand how they can enjoy a comfortable retirement.

4. Budgeting

According to Nesta, an innovation charity involved in the Open Banking scheme, around 15.2 million Britons regularly run out of money each month.

Providing access to a Budget Planner tool represents one way financial education can help employees avoid this.

“In the past, workplace financial education was mainly centred around pensions,” Gerry said. “Now, however, employers are realising that employees can’t save for the future if they are struggling day to day.”

5. Cutting household bills

Office for National Statistics (ONS) data on family spending for the financial year ending in 2018 puts average household expenditure at £572.60 a week.

But many people can easily reduce the amount they pay out each month by switching everything from their mortgage to their utilities.

Topics that financial education programmes might cover in this area include how to find cheaper deals, and what to expect from the switching process.

They could also offer tips on how employees can use their workplace benefits to cut their day-to-day costs.

“Financial education should help employees to understand their workplace benefits and how to make the most of them,” Makings said.

6. Managing debts

Being in debt is incredibly stressful. And it is something that affects a large percentage of the UK workforce. According to research from the Trade Union Congress, the average unsecured debt total per household is currently around £15,385.

Individual financial advice can help people to take control of their borrowing – however indebted they are.

Specialist benefits providers such as Wagestream, which help employers enable staff to access their wages before pay day, can also offer innovative solutions.

“At Wagestream, we use technology to tackle the cashflow problems that come with being paid once a month,” said Chief Executive Peter Briffett.

The author is Tracey Ward, head of business development and marketing at Generali UK Employee Benefits.

This article is provided by Generali UK Employee Benefits.

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