People in the UK are working in the midst of skyrocketing house prices, climbing student debt and an increasingly squeezed labour market. House prices are expected to rise 50% between 2015 and 2025 (ARLA / NAEA, 2015). Furthermore, Royal London suggest that young people will have to save an estimated 8% of their wages from the age of 22 until they reach 77 to achieve the same pension as their parents (2016).
It comes as no surprise, then, that money worries have been grabbing the spotlight in recent years. In fact, one fifth of us have had difficulty sleeping due to stress over our financial situation.
What is financial wellbeing?
Financial wellbeing refers to the – often cyclical – relationship between financial satisfaction and positive mental wellbeing: if you are doing well financially, your mind is more at ease; if your mind is at ease, you are better at work. In a simplistic sense, that is what financial wellbeing is all about. But there’s more to it than just ‘be happy, you’ll work better’ and vice versa.
In more detail, there is a strong evidence base to suggest that our levels of financial knowledge and our financial status can have a direct effect on our mental health. Difficulty sleeping, loss of concentration, lack of decision-making ability and interpersonal tension have all been cited as responses stemming from money worries.
So what can employers do about it?
Obviously, individuals themselves have a lot of autonomy in how they make financial and other decisions affecting their mental health. However, there is a lot that employers can do to ease the process towards improved financial wellbeing.
A simple method of promoting financial wellbeing in the workplace is to assess the financial benefits and educational opportunities already available to employees. This may be a pension plan, a workplace savings account, or in-house resources on money management. Consider whether these are communicated clearly enough to employees: if they don’t already know, shout about it! Employers could do this by posting a blog or article on the staff intranet, or simply by sending out an email to employees.
Another step in the process might involve organising a financial education day or training session, either being designed in-house or involving employers reaching out to external financial agencies. Consider that people in different stages of the employment lifecycle will have different priorities: for example, younger workers may need most help with learning to budget, whereas middle-to-late stage workers may want to focus on maximising their pension savings. As such, this may raise the need for separate education sessions.
Employers should be aware that implementing a financial wellbeing strategy does not have to come at a huge expense. Strategies tie in naturally with pre-existing financial benefit and mental health services, and there are many useful free resources for employers and employees alike to seek financial guidance.
But why should employers actually care?
Most importantly, employers should take an active interest in financial wellbeing because it is the right thing to do. A genuinely caring relationship is easy for employees to reciprocate, helping to build interpersonal wellbeing at any organisation.
But from a business side of things, mental and financial wellbeing can vastly improve efficiency. Employee mental health problems cost UK employers roughly £8.4 billion a year in sickness absence and £15.1 billion a year in productivity losses: taking the time to properly educate and cultivate individuals will benefit organisations in the long run.
A financial wellbeing strategy can cut productivity losses, maintain cohesion amongst working teams, and boost reputation, all without incurring massive costs or legal liabilities. Not only are financial wellbeing strategies ethically admirable for employers to adhere to; they are beneficial to business too.
If you have any queries on the above article, want information on free resources available or wish for more information on planning a financial wellbeing strategy, please contact Scott McCrory-Irving.