It’s not uncommon for individuals to face financial worries at various stages of their life – whether that is dealing with debt, concerns over retirement savings or making the monthly budget work. The impact of poor financial wellbeing can be especially devastating for employees and have a direct impact in the workplace.
WEALTH at work has prepared the following tips as the basis for a good financial wellbeing strategy.
1.) Understand the needs of employees
Before any financial wellbeing initiatives are implemented in the workplace, it’s imperative that employers understand the needs of their employees first. This is because each employee will have individual circumstances which are likely to result in different financial priorities.
They should start by assessing the various cohorts of the employee population and considering their different needs: younger groups may want help to save for a deposit for a first home, whereas that probably won’t be a priority for older groups, but a pension will be. It therefore helps to segment the workforce and research what these different groups of the employee population may want and need.
2.) Develop an appealing benefits package
Once the needs of the workforce is understood, it’s then important to look at the employee benefits platform itself. A good starting point is to investigate if employees are taking up and using the benefits on offer. Making sure benefits are relevant and well-explained can really help take-up and improve personal money management.
3.) Help with the basics
Many employees struggle to understand basic financial issues and often fail to realise the various benefits on offer in the workplace. Helping employees become more familiar with this is an important step in helping them to engage with their finances. Getting them to think about how they spend money on everyday items such as utility bills and insurance is essential. A great example of this is car insurance. It is extremely unlikely that you will get a better quote by remaining with your current provider than from shopping around, but many neglect to do this.
4.) Good debt vs bad debt
Another important principle is helping employees understand the difference between good debt and bad debt. For example, a mortgage is a form of good debt – it makes sense to have a loan in order to own your home as it is a stable, easy to manage approach to long-term borrowing. However, it should still be reviewed occasionally to ensure you have a good deal. At the opposite end of the spectrum, debt with high interest payments such as payday loans and credit cards can get out of control if they are not repaid quickly.
5.) Provide support
The best way to connect employees with their finances and improve their financial wellbeing is via financial education. Increasing numbers of employers are putting financial education seminars in place to help their employees understand the various issues involved, as well as one-to-one financial guidance or regulated financial advice for those who need more support.
Jonathan Watts-Lay, Director, WEALTH at work, comments; “The link between debt, money worries and stress, lower productivity and absenteeism are increasingly recognised by employers and many are now looking for ways to support their employees.”
He adds; “Research we conducted last year showed 90% of employers believe that it’s becoming increasingly important to have a financial wellbeing strategy in the workplace. Financial education plays a key role in this. Proactive and interactive financial education can not only help develop understanding and encourage employee engagement, it can also act as a catalyst for behavioural change and action – resulting in added value for both employers and employees.”