Two in five UK workers (40%) report increased financial anxiety in the wake of the Coronavirus pandemic, but it is millennials (those 25-34) that are the hardest hit with 51% saying they have suffered from increased anxiety around their personal finances according to the new ‘Changing Trends of Financial Wellbeing’ report from Close Brothers.
Prior to the pandemic, just under half (48%) of UK employees were happy with the state of their finances and more than a quarter (28%) were actively unhappy with them – rising to more than a third of 18-34 year olds. These figures had changed little since Close Brothers’ 2018 Financial Wellbeing Index research – 51% and 28% respectively. Notably, before COVID, younger employees were already more worried than older ones (30% of 18-34 year olds worry at least daily, compared to 19% of 35-54s and 12% of employees aged 55 and over).
Examining the impact of the lockdown on overall wellbeing; mental, physical and financial health, UK employees are revealed to be under significant strain.
Before lockdown, one in ten (10%) of employees say that they worried about their physical health daily. This is the case for almost twice as many women than men (10% v 6%). Mental health is also a significant issue, with 8% of employees worrying about their mental health constantly, and a further 8% saying they do so on a daily basis. But once again it is the younger demographics that are most vulnerable, with nearly a third (31%) of those aged 18-24 worrying about their mental health either daily or constantly. Around two in five (39%) of this younger group said they worried about financial health either daily or constantly.
Once the pandemic hit, just under half (45%) of workers were found to worry more about their physical health compared to pre-crisis times, making it the biggest health concern increase among workers. Around two-in-five (41%) worry about their mental health more. But once again, younger workers are being hit hardest. The corresponding figures for Gen Z (those aged 18-24) and millennials that worry more about mental and physical health are both 56%, while financial health came in at 45%.
A more uncertain work environment is certainly playing a role in causing anxiety, with our findings also highlighting that younger workers are highly vulnerable to income reduction. Around one-in-ten workers have been forced to work reduced hours (11%), but this burden is felt much more by those earlier in their career. Nearly a quarter (22%) of Gen Z employees, and 19% of millennials have had their hours cut. Such a squeeze has meant that 8% of workers have seen their savings eroded, rising to 15% among millennials.
When it comes to tackling these money challenges, personal finance websites were the most popular resource amongst workers (50%), with three-in-ten (30%) willing to consult their bank, or family members and friends. A slightly smaller proportion are likely look to their government organisations (28%), one in four (25%) will look to consult an independent financial adviser and 21% seek guidance from their employers.
Two in five (40%) employees have been able to make use of having more time on their hands by reviewing their finances. And it is a noticeable trend that it’s those younger workers, below the age of 44, that are more likely to take the time to get to grips with their money situation. The average among this cohort is 45%, compared to 34% of those aged 45-74.
Jeanette Makings, Head of Financial Education at Close Brothers said: “The coronavirus crisis has brought into sharp focus the importance of financial wellbeing and highlighted the far-reaching impact of financial stress across all aspects of our lives and overall wellbeing. While these challenges apply to all UK employees, younger workers are more affected, both in real financial terms as well as from heightened anxiety and worry. This cohort have not yet had the same amount of time to build up their financial resilience, so face the double-whammy of income cuts with a minimal financial cushion.
“It’s encouraging that people at all life stages are using the extra time provided in lockdown to get to grips with their financial situation, but we shouldn’t expect them to do it alone. Employers are one of the trusted resources people turn to for guidance and they can do a great deal to help their employees to be better prepared to meet any financial challenges head on. Raising financial awareness and capability through workplace financial education tailored to an employees’ own financial and life stage, can help their workforce to emerge from the lockdown more financially resilient and so happier, more productive, and with a more secure financial future.”