How to address financial wellbeing in a cost of living crisis

According to The Money and Pensions Service, 8 in 10 UK employees take their money worries to work. Inevitably, this adversely affects their performance.

Money is a very emotional thing—it represents our power to affect positive change in our lives, our ability to cope with adverse situations, our liberty and, perhaps regrettably, impacts upon our sense of self-worth. If you have employees whose finances are out of control, it’s likely they feel a deep sense of insecurity. And you may have more than you think.

Twenty-four million UK adults don’t feel confident managing their money. The CIPD says that 7 in 10 UK employers say staff performance is negatively affected by financial pressure, meanwhile 4.2 million workdays are lost each year because of absences due to the stress of dealing with financial challenges. This costs UK business £626 million in lost output.

But what if there was a way to ensure your workforce felt financially secure, confident that they could deal with unexpected money issues and empowered when it came to controlling their finances?

The four pillars of wellbeing: physical, social, financial and mental

Our individual wellbeing can be likened to a structure made up of four interlinked pillars. Each is attached to and buttressed by the next, forming an architecture that protects our emotional and bodily health.

Of these priorities, it’s possibly toughest to maintain the structural integrity of the financial wellbeing pillar. To feel secure, we need a firm sense that we are in control of our financial future and have enough money to survive and live adequately in the present.

As employers, we have a material obligation to help our workers achieve a state of financial wellness. Research shows an intrinsic link between financial insecurity and poor mental health and as money worries are the largest driver of anxiety in the workplace our obligation is practical as well as ethical.

As the cost-of-living crisis bites, some employers are reaching for cash bonuses to offer help to staff. But at best this is a reactive step that can provide short term relief. It is far better to be proactive and set our employees up for future financial success.

To achieve financial wellness, a person needs to be able to make enough money to cover their necessary expenses, as well as enough to meet unexpected costs and debts. As employers, we are in a position to influence our employees’ financial situation for the better – by providing access to advice that can help them navigate the road ahead, taking into account their life stage, individual pressures and their aspirations for the future.

The four stages of financial life: gaga, lager, aga, saga

When you enter into this world, your relationship to money is dependent on others. You’re firmly in the ‘gaga’ stage – you’re not responsible for anything more than your pocket money or, possibly, eventually, the Saturday job.

When a young employee starts with your firm, they’re most probably in a ‘lager’ life stage. Nights out and entertainment take precedence here, and in the current climate, a younger employee might raise legitimate concerns that because of inflation, any money they save is plummeting in value.

They’re also likely to be renting and might be aspiring towards home ownership (although many in ‘Generation Rent’ have given up on the prospect), and it’s possible, in the present financial crisis, that their landlord is bumping up their rent to unaffordable levels.

It’s fair to say that generic financial advice isn’t going to replace this murky climate with crystal clarity. And it’s not necessarily easier for those who are older. With passing years come more and more opportunities to fall into financial pitfalls and incur unpayable debts.

Older employees – who you could say are in more of an ‘aga’ life stage – might be struggling with the costs of raising children or paying rising mortgage installments. Or they might be navigating the impacts of unexpected family illness or a difficult divorce.

With all of these possible factors, you can’t guarantee it’s going to be easy for anyone. So if we want our employees to arrive at a ‘saga’ life stage in good financial health, we employers need a good financial health plan.

Finances are personal – so financial support must be too

The tools an employee needs at different stages of life are totally different. One person may need help to afford Christmas expenses, while another might be saving for a house or trying to cope with increased expenses after the birth of a child.

Catch-all financial help – the kind that can sometimes be provided through apps and company-recommended websites – is often too generic or too buried to provide much value to our employees.

When it comes to issues that are as personal, far-reaching and anxiety-charged as personal finances, we need to offer our employees something more bespoke.

Financial wellbeing: a vital first step

By giving your employees access to a financial adviser, you’re putting other means of support, such as employee benefit discounts or bonuses, into a longer term context.

As part of our benefits package, we can offer your workforce bespoke, individually tailored one-to-one financial wellbeing workshops. This gives your employees a chance – online or face to face – to address their personal circumstances, and to talk through their own personal situation, objectives and anxieties.

When people face money worries in the UK, we usually don’t discuss our feelings, worries and what we perceive as our weaknesses – instead we often try to deal with stress alone. This is bad for us all, and a private discussion with a financial advisor can be a way to break down these barriers.

The workshops help with retention too. Financial pressure can lead to a valued employee leaving in search of a higher salary, but if they feel like they belong at your company and can manage on their present salary, they’re much more likely to stay. And of course, sick days due to stress-induced illness will reduce too.

If you’d like to know more about ways Amba can help you retain and look after employees in the months ahead, get in touch today.

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