Today, financial wellbeing platform nudge Global releases its 2021 global financial wellbeing report, Disrupting Money Habits: Why it’s time for organizations to break cycles of exclusion, a global research report exposing the opportunity — and need — for employers to better support employees to build financial acumen.
Just 9% of UK employees learnt how to manage their money at school or through a course. This is below average for the EMEA region (12%),and means that many are ill-prepared to make financial decisions or deal confidently with financial shocks. This is starkly apparent in the wake of the COVID-19 crisis, when more than one in three employees (37%) feel anxiety about their financial situation and one in four (25%) feel ashamed.
What’s more, UK employees may be put-off seeking professional help. A significant number (40%) have felt excluded by the financial industry — and within certain groups, this proportion is even higher. Almost half (46%) of women have felt excluded compared to 34% of men, and while 38% of White people have felt excluded, this rises to 58% among Asians and 63% among people of mixed ethnicity.
Existing financial systems are clearly failing to provide the varying levels and types of support required by diverse employees. As income providers, employers have the potential — and responsibility — to step up and fill the gaps. But right now, less than a third of employees (32%) are offered personal finance education related to their personal circumstances and interests as an employee benefit, and 59% do not believe their employer is interested in helping them achieve their financial goals.
What’s more, there’s an alarming imbalance in those that do receive support. High earners* are 51% more likely to receive financial education from their employer than low earners and are 34% more likely to say their employer is interested in supporting their personal finance goals. This trend contradicts findings from across the EMEA region, where low earners are marginally more likely to receive financial education. However, it can be seen across APAC and North America where high earners are 19% and 70% more likely to receive financial education respectively.
Jeremy Beament, Co-Founder and Director, nudge Global comments: “The correlation between earnings and financial education is a concerning trend. In the UK, high earners are twice as likely to have received financial education at school (14% vs 7%) – and we see this trend mirrored to a greater or lesser extent across continents. Our data suggests that this education advantage is continuing into the workplace. There’s a real opportunity for employers around the world to address this imbalance and improve the financial knowledge of the workforce more broadly. In doing so, they will help resolve feelings of financial exclusion, support social mobility, and create a better employee experience that fosters improved wellbeing.”
The research suggests that improving employees’ financial wellbeing is likely to have a positive impact on their mental state. Two fifths (39%) of UK employees tie their self-worth and contentment in life to the number they have in their bank account. This is particularly true of women (43% vs 34% of men) and younger employees (55% of 18-24 year-olds vs 25% of over 55s). However, 30% feel depressed about their finances, meaning that they’re likely to be experiencing broader feelings of discontentment and inadequacy.
There is also clearly an appetite amongst employees — and younger employees in particular — to improve their financial knowledge. Almost a third (30%) of 18-24 years olds turn to YouTube videos to educate themselves about personal finances, with almost the same proportion (29%) looking to TikTok. This trend can be seen across EMEA, although it is less pronounced with 27% looking to YouTube and 17% to TikTok.
Jeremy Beament concludes: “Globally, we’re seeing a trend towards younger generations turning towards unregulated sources of financial information. These could impact how they spend their wages — and ultimately their financial and broader wellbeing. There is clearly an appetite — and a need — for more robust financial education. Employers are ideally placed to provide this, and are likely to benefit significantly from a happier, more contented and engaged workforce as a result.”
Please view the full Disrupting Money Habits report here
*Low earners refers to those with an annual household income of less than £35,000. High earners refers to those with an annual household income of more than £75,001.