Why now is the time to get financial wellbeing right

We’ve learnt a lot in the last eight years about personal finance. We’ve understood what impact the various macro and micro responses to the credit crisis have had on individual finances.

We’ve grasped what financial wellbeing means and why it’s important to individuals. And now we’re beginning to understand that individuals want their employers to help them improve their financial wellbeing.

At Neyber we’ve embarked upon a new report, The DNA of financial wellbeing, which puts the financial wellbeing of the UK’s workforce under the microscope. The wide-ranging survey of 10,000 UK employees has examined, for the first time, what the financial impact is on organisations whose employees are worried about their own personal finances.

Analysing the UK

This provides us with a great opportunity to understand precisely what levels of financial wellbeing exist in the UK workforce, what poor wellbeing looks like, the repercussions at work and what employers can do to address the problem.

We’ve known for a long time that a significant proportion of the working population lacks a sufficient savings safety net. Many of those who save have less than one month’s salary in the bank – not necessarily enough to cover any unexpected financial outlay. So it’s not surprising that the vast majority of people are worried about money.

The impact of money worries

Money worries and a lack of financial resilience manifest themselves in different ways in individuals. They may lose sleep, they may suffer anxiety and, as with any mental health issues, they will have an impact on their working lives, as our report demonstrates.

Seventeen and a half million working hours are lost as a result of employees taking time off work because they are experiencing financial stress.

Even if they make it into work, they can’t get their jobs done to the best of their abilities because 55% say financial pressure distracts them from fulfilling their roles. And their relationships with colleagues and line managers are damaged because of the financial pressures employees are concerned about.

We know that younger employees are particularly vulnerable to money worries. And with the millennial age group predicted to comprise a larger and larger proportion of the workforce over the next ten years, so the number of employees affected by financial concerns will grow.

Cost to employers

All this adds up to a substantial cost for employers to bear. We have calculated that the lost productivity and increased absence and employee turnover associated with financial stress costs UK employers in the region of £120.7 billion every year.

There’s no doubt the figures are very worrying. But they also present a vital opportunity for us to begin to address individuals’ need for greater financial resilience and provide the support they need to achieve this.

We know that many members of the workforce say they would value financial assistance from their employer such as access to affordable loans, attractive savings, financial awareness programmes and support and guidance. And at Neyber we believe that employees should have a statutory right to access fair financial services in the workplace, just as they do for pensions auto-enrolment.

Employers have many options available to them to assist employees in matters of personal finance. Now that we understand the scale of poor financial wellbeing and the knock-on effects of it in the workplace, it’s crucial that employers stop and think about what they can do to help their employees who are concerned about their money.

Understanding the implications of poor financial wellbeing

But it’s not just about individual organisations. The whole country now has time in the economic cycle to pause and think about the implications of poor financial wellbeing for the entire economy, and consider how they can organisations to help individuals in understanding and taking the best possible approach to managing their personal finances. After all, this is a matter not just for that individual but their employer and the nation as a whole.

We understand the issues and the scale of the problem now. This means we have a great opportunity to get financial wellbeing right.

You can download the key findings of "The DNA of Financial Wellbeing" report here. 

Monica Kalia is co-founder of Neyber.

This article was provided by Neyber.