Our recent poll* of employers has found that 90 percent of respondents believe that it’s becoming increasingly important to have a financial wellbeing strategy in the workplace. Contributor Jonathan Watts-Lay, Director – WEALTH at work.
It’s great to see that so many employers are recognising the increasing importance of having a financial wellbeing strategy in place to help their employees feel financially secure. Employee wellbeing is made up of various elements but financial wellbeing is particularly important, as the impact of poor financial wellbeing can be especially devastating for employees and have a direct impact in the workplace.
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. We believe the best way to achieve this is to provide employees with the knowledge to make informed financial decisions throughout their career.”
A big part of the solution is helping employees become more familiar with the basics of money management. Getting them to think about how they spend money on essential items such as utility bills and insurance is paramount. 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. The cost of paying the interest may force someone into even greater financial difficulty. Having a good understanding of how different types of loans work can help ensure informed decisions are made.”
It’s also 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. And if not, why? Is it because the benefits aren’t appropriate to the workforce, or are employees unable to understand either the way the benefit operates, or how it could help them? Making sure benefits are relevant and well-explained can really help take-up and improve personal money management.
Employers are now increasingly putting in place financial education seminars to help their employees understand all of these issues, as well as one-to-one financial guidance or regulated financial advice for those who need more support, leading to a more confident and financially empowered workforce.