Financial wellbeing: the benefits of a big-picture approach

If you work in HR or reward, you are in a wonderful position of possibility. You can help many people with a whole range of different issues. If your employees are engaged with your organisation (a challenge of its own, of course!) you can help drive positive change, including the extent to which people feel in control of their lives. For most of us, when things are properly organised and being managed effectively, we feel less anxious. And we all know a less anxious/stressed employee is happier and more productive. Engagement and employee wellbeing therefore go hand in hand.

Money is one of those things that has the potential to consume your subconscious. If you’re not in a good place financially, your mind will be dominated by nagging worries. Every time you spend, the little devil that sits on your shoulder (and in my case, tells me not to eat cake) will give you a nudge. “I’m not sure you should be buying that, think about how much money you haven’t got at moment…”

We also know that not everyone is organised with their money, it just doesn’t come naturally in many cases. Statistics tell us that:

·      24% of UK adults have little or no confidence in managing their money (FCA)

·      46% are paying for non-mortgage debt (FCA)

·      2 in 5 employees have less than £100 in savings (Money Advice Service)

Good money management requires a combination of knowledge, planning and organisation. This is where employers can provide invaluable support. Workplace financial education support can help people understand their financial options, how to budget and make good choices in advance, based on a little bit of research.

Help your people avoid the financial pitfalls resulting from short-term, quick-fire decisions where they don’t get the best value for money. It’s this lack of organisation and planning that generally leads to ‘firefighting’ and not being able to see the wood for the trees.

For example, in April many employees saw their pension contributions increase in line with the auto-enrolment legislation. If your employees are ‘financially firefighting’, they would be concerned about the affordability of the higher contributions. However, the personal allowance also increased in April, so for many people this will offset most, if not all, of the increased pension contribution. By having all the facts, your employees get a clearer picture. Perception is everything.

You can open people’s minds to financial knowledge and planning through financial wellbeing workshops, courses and the like. It pays to let the professionals do this for you so you don’t get caught up in the compliance world of financial promotions or unwittingly giving unregulated advice.

If your staff are open minded and plan well, they are empowered to make more sound choices with their money and be the happier for it. Many of your staff could be in the following situations and could benefit from appropriate guidance:

·      Low levels of existing cash savings – start saving regularly, look into regular saver accounts, easy-access savers, cash ISAs, and see what the best rates are for what you need and can afford.

·      Inadequate provision for retirement – don’t just think about the minimum level of contributions set by the government. Look at your personal situation, perhaps use a pension calculator, and think about how much you want and actually need to pay into your pension each month to have the type of retirement you really want.

·      Want to plan for their children’s future – start early and pay into a Junior ISA. Even with just a small contribution each month, by having years before the money needs to be used, you can invest in higher risk stocks and shares, and take advantage of compound growth. This could fund university fees or provide the building block for a deposit on a house.

·      Have cash savings but uncertain how/where to invest – for those with limited, or no, investment knowledge, there are plenty of solutions in today’s market. Robo-guidance and online modeling tools can help you understand your attitude to investment risk, and managed portfolios are available where someone else makes the investment decisions for you.

Of course, all of the above require having some spare cash in the first place. So, financial wellbeing has to start with the fundamentals of money management. Encourage your workforce to understand their current financial position, teach them how to budget and set goals. Enable employees to manage debt so that it does not control them.

Help your staff see the big picture, how to organise their finances and plan well. This can significantly improve how confident they feel about their financial decisions and greatly reduce stress and anxiety. Confidence, knowledge, planning and organisation; don’t these all sound like transferrable skills you’d like to see across your whole workforce?

This article was first published with REBA on 19 April 2018