Karen Thornley, chief commercial officer, Personal Group
Financial wellbeing isn’t just about how much money people have. It’s about the control that they have over their finances, and the skills and capability they have to manage their money.
To make good decisions around how to save, spend and borrow, employees need access to relevant information and advice. With the right educational support, people will feel more confident doing everything from decoding their payslip to saving for retirement.
What’s the knowledge gap?
Companies are having to make up for a gap in the curriculum, with 85% of young adults wishing they’d been taught more about money management at school. This has created an environment where many people struggle with how to manage their finances.
The Money and Pensions Service agrees that the complexities of the UK financial system, changes in social attitudes and a retail-led culture have all outpaced people’s ability to develop money management skills. This has led to consistently high levels of household debt.
Financial struggles have, of course, been worsened by COVID-19 because of life events like job loss or a period of illness. However, management of money is a systemic problem that will persevere beyond the country’s recovery. Even before COVID-19, 8.3 million people in the UK had problem debt, according to the Money Advice Service, meaning that they struggled to cope with the money they owed.
What can employers do to bolster education?
Employers can empower their workers to make informed decisions and feel more in control of their finances by signposting them to relevant guidance and support.
There is a wealth of financial advice available online, but the volume of information to sift through can feel overwhelming. It helps to have guidance come from one trusted source, which is where an employer can step in.
A company could offer webinars, conferences, clinics, 1:1 financial mentoring, support groups, assessments, and budgeting advice. Employee Assistance Programmes also often have a 24/7 helpline which means that even ‘hard to reach’ employee groups can access guidance when they need it.
What other support can employers offer?
Beyond education, there are several initiatives employers can provide access to in order to help workers take control over their finances. This could include salary sacrifice schemes to buy personal tech devices, affordable loans, or advances on pay.
Helping employees plan for the worst situations can also provide peace of mind. Companies can plug any gaps in current insurance provisions by providing workers with easy access to cost-effective individual policies. For employees who don’t get sick pay or death benefit, this will make sure that they and their dependents are provided for should the worst happen.
How can companies avoid crossing a line?
Money is still a taboo subject. This means that employers may feel they are intruding by offering advice, and they might prefer to leave individual employees to manage their own money.
But they must remember that financial education increases knowledge and puts power back in the hands of the workforce. If people are more confident with their finances, they will feel more in control and protect their mental health.
Education really is the foundation of a solid financial wellbeing strategy. It helps employees join the dots across all benefits and know how to use them to support their own financial issues, plans and goals.