20 Feb 2023

Top ways to connect financial wellbeing with broader support

Physical, mental, and financial wellbeing are intrinsically linked

When it comes to wellbeing, particularly concerning employee benefits, the industry often refers to pillars, with financial, physical and mental wellbeing being the core three.

This gives the impression that they’re independent, which is not the case. Just like the human anatomy, where something happening in one part of our body affects another area, these wellbeing pillars are connected.

Anyone who has to struggle to make their salary stretch far enough to cover rising household bills is likely to become stressed. Prolonged stress leads to mental health issues such as anxiety and depression, which, in turn, lead to physical health issues, such as heart disease, abdominal pain and insomnia.

But you cannot tackle the pillars in isolation.

You won't solve all the other issues by supporting financial wellbeing. A person struggling with their mental health is more likely to be unable to make clear decisions or manage their finances, which could worsen their financial and mental wellbeing.

Whichever way we spin it, physical, mental, and financial wellbeing are intrinsically linked.

An all-encompassing approach

The elements that could make up a financial wellbeing strategy include:

Financial education
Money management tools
Employee discounts
Employee cashback
Salary finance
Salary deduction schemes

As well as these three pillars of wellbeing being connected, there’s also a strategic element to consider: using benefits to fund benefits.

Buying more leave

Allowing employees to buy more annual leave is a mental and physical wellbeing booster, giving them a chance to spend more time with families, travel, or have a much-needed rest.

From a business perspective, you have a happier, more engaged employee and you’re saving money on salary and tax contributions.

For example, if a higher tax-paying employee earning a salary of £47,000 annually buys five extra days annual leave, it would reduce their salary by £903.84. This equates to £75.32 gross and £43.68 net per month less in their payslip.

This reduces the employer’s annual pay bill by £903.84, but there’s also a reduction of £124.72 in national insurance contributions. That’ an overall business saving of £1,028.56 for this employee.

And this is based on one person. If four people on the same salary buy five extra days leave, the business would save £5,142.80.

Salary sacrifice

Annual leave is only one of the salary deduction schemes available. You can also use them to help employees fund:

the purchase of a new bike – saving money on the cost of the commute and boosting physical wellbeing;
consolidate debt – boosting their overall financial wellbeing and reducing financial anxiety and stress; or
a new green car – which helps cut the organisation’s carbon footprint and is cheaper for employees to run.

For each employee that takes out a salary sacrifice scheme, the business saves up to 15.05% on national insurance payments and lowers their pay bill.

Using business savings to boost wellbeing

Financial wellbeing benefits can bring savings to the business and the employee, and the best part is that you can use them to fund further wellbeing support.

From the annual leave example, the £5,000+ potential savings could be used to help fund the following:

Physical wellbeing benefits

Corporate gym membership
Online GP
Health screening

Mental wellbeing benefits

Employee assistance programme
Training mental health first aiders

Reward and Recognition

eVouchers
Gift cards
Voucher cheques
Reward ceremonies

Financial wellbeing benefits

Discounts platform
Household support card

Social wellbeing

Away days
Team meals
Invest savings in employees

It isn’t just employees feeling the strain from the rising cost of living – businesses are also affected. It can be tempting to see the potential savings outlined here and keep them in the bank. That would be a false economy.

Research shows that employees are looking for supportive employers with a strong employer brand and employee value proposition. Your benefits offering is crucial for attracting and retaining talent and empowering your people to perform. Use strategically placed financial wellbeing benefits to develop a robust, inclusive, and sustainable offering.