Guest Blog - Are you helping your employees to be financially happy
According to an influential report by Barclays on financial wellbeing, 1 in every 10 employees is struggling financially, but won’t admit this to their employer. 46% are worrying about their finances. And 20% say that worrying about their finances affects their work.
Perhaps even more interestingly (at least for an employer), 38% of employees say that they would move to a company which put financial wellbeing as a priority. Given the expense of recruitment and onboarding, retaining good employees is a key for any employer.
Much of the time, making employee financial wellbeing as a priority can be as simple as educating on financial issues, showing them how to engage with their money.
A lot of the focus on financial wellbeing in the workplace has been on the basics of money – budgeting and debt counselling, for example. Whilst the negative aspect of money is undoubtedly important, there is another aspect which is often overlooked. How we can most effectively use our money to increase our wellbeing.
In theory, financial planning is very simple. Work out what you want from life, then spend your money on that. Unfortunately most people have not received any financial education and are not sure where to start.
There are five parts to financial wellbeing
· Having a clear path to identifiable objectives
· Control of daily finances
· Being able to cope with financial shocks
· Financial options
· Clarity and security for those we leave behind
These, then, are the constituent parts to creating a financial plan.
What can an employer do to help their employees to engage with their finances?
Well, understanding how money leads to happiness is a good start, in order that any support can have the maximum impact. For example, according to the Barclays report, people gain more increases in wellbeing from knowing that they have a pot set aside for emergencies than they do from having a pay rise.
An employee benefits programme tailored to the financial wellbeing of employees can significantly improve employee loyalty. The sort of things we have seen include: a focus on pensions for older employees, but cash plans for younger employees (to help them create that emergency fund); properly communicate sick pay policies; debt counselling; lunchtime financial wellbeing workshops.
Workshops typically cover three separate subject areas
1. The basics of how to manage money
2. How to use money in a positive way to maximise wellbeing
3. Retirement issues
Clearly, these will appeal to different sections of the workforce (although there tends to be an overlap in attendees in 1 and 2).
The steps required to engage with our money have, in fact, never been easier. The first step is to work out our disposable income. This means a bit of analysis of bank statement, and there are plenty of apps to help with this, such as OnTrees and Money Dashboard
The question to answer is this:
How much money do you need for a happy life right now?
Any income left is available for spending on areas that will increase wellbeing. This will be areas such as experiences (which create more wellbeing than buying ‘stuff’) and bringing the future closer (a much nicer expression than ‘savings’ and ‘pensions’!).
One interesting outcome from this process is that a person who has taken the time to work out what they want their future to look like may revisit how much they need for a happy life now – their subsistence income – and will often make changes in order to bring that chosen future closer.
And an employer that helps their employees to go through this process is going to end up with great wellbeing amongst their employees. And this means increased loyalty and increased productivity.