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What is Financial Wellbeing?

29th January 2020
29th January 2020

The government has announced a plan to turn Britain into a nation of savers by 2030, and at the same time cut the number of households relying on credit cards by launching a financial wellbeing programme.  Which prompted us to ask – what is financial wellbeing?

Some of the figures we’ve uncovered are worrying:

  • 36% of Britain’s employees have financial worries
  • This group are many times more likely than the rest of the population to have sleepless nights, aren’t able to finish daily tasks, and have troubled relationships with work colleagues
  • They are more likely to be depressed and are more prone to panic attacks

What does this mean for employers

  • For every 1,000 employees, there are 30 lost days per month due to absenteeism
  • There are additional training costs
  • There are additional recruitment costs as this group are more likely to be looking for another job
  • This gives an impact of between 9% and 13% of the salary cost

The 3 salary bands which show the greatest worries about money are those earning less than £10k, between £10-15k, and those earning over £100k – high income doesn’t mean the end of money worries.

So what causes financial stress?  Evidence shows that many people find sticking to a budget in a month to be a challenge and this keeps them in a cycle of short term, expensive debt as 29% of people regularly run out of money before payday.

For those who regularly struggle, their typical financial profile looks something like this:

  • The number of days they could live before they have to borrow is 4
  • The average amount they save a month is £22
  • 70% save nothing each month
  • Their average total savings is £246
  • 86% have less than £500 in their combined current and savings accounts

What can employers do?  Clearly this lack of financial wellbeing of the workforce has an impact on business.  There are 6 steps that have been identified as the start of a financial wellbeing action plan:

  • Make a robust business case which clearly demonstrates the business impact of financial wellbeing
  • Make progress by targeting the help at those who need it most
  • Know the needs of your workforce as different help will be needed by different people
  • Initiate a change in culture where people are encouraged to talk about their problems
  • Build a comprehensive communications plan into the strategy so people can discover easily the help available
  • Measure the impact, such as sickness rates, retention rates, job satisfaction surveys, benefits take up, or engagement in financial education.

Clearly this is a complex area – read more about it here.

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