With almost half of UK employees struggling to afford the fuel to get to work, and ten per cent admitting to having skipped work altogether due to a lack of funds, it’s clear that financial concerns are a widespread issue.
In the UK alone, household debt averages at around £58k, and combined with credit cards, mortgages, overdrafts and student loans, this figure can quickly spiral . So, good money management is essential.
And there’s more to it than simply being savvy with spending – with so many different credit options now available, employees also need to figure out which loan will best suit their needs or which contract will give them the best deal. And mistakes here can be costly.
As a result, decisions like these don’t just affect an employee’s financial wellbeing, but can also have an impact effect on their productivity and mental health. With poor financial wellbeing costing UK employers 31.56bn each year, businesses must ensure that staff are receiving the support and education they need to manage their own financial pressures.
The root of the problem?
Smart money management is rarely taught in schools, so it’s no surprise that employees struggle in this area. A YouGov poll actually found that two out of ten people under 35 don’t have a full understanding of a what a pension actually is, and according to the Office for National Statistics, 50 per cent of millennials have no emergency savings at all. Clearly, financial literacy is something that hasn’t been placed high enough up on the agenda, leaving many employees unprepared.
Paired with this lack of education is the stigma of debt. Many people are reluctant to open up about money struggles and, in not voicing their troubles, don’t get the professional advice that they need. Instead, they turn to short-term loans and credit cards, which are often not economically sound, and can bring added stress when high-interest loans are due to be repaid.
Not a quick fix
So, what can employers do to help? While a pay-rise may seem like the obvious option, simply giving employees more money is not the most helpful solution. What businesses should do instead is help staff manage their ongoing expenses. Introducing money-saving initiatives like flexible working, cycle to work schemes, travel loans and employee discounts can have a major effect on outgoings.
Businesses should also encourage staff to save more. The option to put a small proportion of wages directly into a savings pot, for example, can help employees pay off existing loans, or build a nest egg. Knowing that there’s a sum of money set aside for a rainy day can be incredibly beneficial for employees’ mental wellbeing and also provide practical advantages for the future.
Finally, businesses should provide their staff with money management advice. This guidance can be invaluable to employees as it equips them with the knowledge they need to make the right financial decisions, feel better about their spending habits, and worry less about money.
If the company takes this approach, employees will be more likely to come forward when they’re struggling and get the help they need. As a result, workers will know that their employers care about their wellbeing, which will contribute to a positive working environment that boosts employee morale and productivity.
About the author
Jamie Mackenzie joined Sodexo Engage in November 2013, bringing with him over ten years of Business and Consumer Marketing experience in senior roles within blue chip organisations. Jamie is responsible for or company strategy, product roadmap, brand management and market communications.