- Financial Wellbeing
What is Financial Wellbeing, and Why Does it Matter?
The term 'financial wellbeing' can sound like another bit of jargon. "Surely it's just a way of saying whether someone's broke or not?" a character from Mad Men might ask.
But that's not right.
Your employees have their own individual finances. Mortgages, salaries, pensions, investments, savings, and so on. However, it's not just the state of their finances, but also how your employees feel about them, that determines their financial wellbeing.
Why should employers should be concerned about the financial wellbeing of their employees?
Here's why: One in five employees say that worrying about their finances affects their performance at work. This is according to a survey by Barclays of people working at 100 companies.
Another finding is that 70% of employers believe their employees feel the organisation is concerned about their financial wellbeing — compared to 10% of employees.
Add to this that 38% of employees say they would move to a company which made financial wellbeing a priority, and suddenly something that seemed like jargon becomes of very real importance.
In a nutshell, staff with strong financial wellbeing are more productive and less likely to leave.
"Once we've explained why financial wellbeing is a crucial part of the overall wellbeing picture, companies start to sit up and take notice," says Kamwell's CEO, Kirsten Samuel. "They want to understand what it really means, and what they can do about it.
"Financial worries can be linked to other areas of wellbeing, like someone's mental health or their career path. We look at ways to help people manage both their finances, and the worries that they have about them — it's not all about paying them more!"
Barclays defines financial wellbeing as 'Being and feeling financially healthy and secure, today and for the future'.
In fact, they found that it tends to be savings, not income, which determine a person’s financial wellbeing. This includes having a ‘savings buffer’ — a pot of money set aside for unforeseen outgoings — and the ability to save money regularly.
So what are employers to do? Many firms already offer benefits that can help their workers' money go further, like childcare vouchers. There are even some schemes available to make it easier save, such as workplace ISAs.
"The starting point for most businesses is to help their staff understand what their options are," explains Ms Samuel. "Add in some sound, independent advice, and you enable them to make healthy choices — for their bank balances, and their peace of mind."
The company 'WEALTH at work' provides financial education and guidance in the workplace, and is part of the Kamwell Partner Network. Its director, Jonathan Watts-Lay, describes its approach to improving employee financial wellbeing:
"The best way to get people engaged with their finances is to make financial education as meaningful and relevant as possible to different segments of the workforce.
"For example, providing relevant financial education around different career stages will lead to improved financial wellbeing. Someone aged 21 may not be as interested in pensions, but might want to think about joining the company share scheme. On the other hand, someone aged 55 might want help with retirement planning.
"It's also important to provide multiple delivery mechanisms, from seminars and webinars, to animation and interactive games. ”The importance of addressing different parts of a workforce by age is underlined by a PWC survey of American workers. This found that Generation Y employees, (aged 22-34 in 2016), appear more concerned about 'current expenses', whereas Baby Boomers (aged 56-73) and Generation X (aged 35-55) also frequently cite 'retiring' as one of their top financial concerns. PWC's report also contained a stark statistic about the impact of financial wellbeing on productivity: 37% of respondents say that they spend three hours, or more, at work each week thinking about or dealing with issues related to their personal finances.
The bottom line seems to be that by making your employees more financially savvy — which is desirable in itself — they get more work done, are more loyal and engaged, and their overall wellbeing improves. None of which should be undervalued.