Financial Wellbeing for Employees: Everything You Need To Know
Are your employees feeling the financial squeeze? A combination of rising inflation, high interest rates, and the increased cost of living have left many employees experiencing financial worries, which has a negative impact on employee wellbeing.
- - Almost 80% of workers take their money worries to work
- - Employee financial stress impacts the performance of one in four staff members.
Furthermore, poor employee mental health in the UK workplace accounts for 40% of employee turnover costs, as financially stressed workers are more likely to look for another job. Plus, poor workplace mental health is said to cost UK employers in the private sector between £43 and £46 billion each year.
Whilst it may take a while longer until the financial uncertainty clears, the good news is that there are things employers can do today to help support their teams, boost employee wellbeing, and ensure that workers can navigate the financial landscape.
Our research into how employers can ease stress for employees during economic uncertainty found that benefits need to be a part of the solution to achieving financial stability. So, in this blog, you’ll discover the measures you can take to support employees struggling to make ends meet and improve financial wellbeing at work.
What is the real impact of employee financial wellbeing?
There is a close link between financial health and mental health. Poor mental health can make it trickier to earn and manage money: money worries can make mental health worse, according to Mind, the mental health charity.
Research by the Chartered Institute of Personnel and Development (CIPD) found that:
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- More than half of employees are struggling to keep up with bills and credit commitments
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- Financial stress and money worries have a negative impact on sleep, mental health, and self esteem
One study found that employees struggling financially have at least one sign of poor mental health. This can include mental health issues including poor concentration, less engagement, and reduced motivation.
Money worries can also negatively impact physical health, which can lead to an increase in absenteeism or employee burnout. Social wellbeing can also affect relationships at work and home.
On the flip side, taking steps to improve financial wellbeing in a company's overall mental wellbeing strategy, won't just help ease the pressure on employees, but will also help to boost productivity and retain staff.
What financial issues are employees facing?
The number one source of stress for employees is finances, according to the PwC 2023 Employee Financial Wellness Survey, with the greatest money-related stress being the worry that inflation will lead to everything costing more, resulting in financial difficulty.
The economic uncertainty poses unique financial challenges for employees. Having less purchasing power may force workers to reduce household budgets, reconsider housing affordability, struggle to balance family responsibilities and consumer debt, such as credit cards and personal loans, and make changes to their retirement plans.
How employers can support employee financial wellbeing at work
The vast majority of employees want help with their personal finances. However, companies aren't immune to financial pressures themselves, and many UK businesses are taking a 'wait and see approach' to decision-making.
With salary increases and bonuses potentially on hold, one of the best ways employers can help to ease the financial burden is through employee benefits and salary sacrifice schemes. Our research found that over 70% of employers had seen an increase in the uptake of benefits to employees due to the cost of living crisis.
By offering tax breaks on everyday products and services, salary sacrifice schemes are a particularly effective way to support staff to manage and enhance their financial wellbeing during difficult times.
From alleviating financial hardship to improving employees' relationship with money, here are some ways in which forward-thinking employers can help their employees - and companies - thrive.
Home and tech salary sacrifice
With over half of consumers (52%) cutting down on non-essential spending, the home and tech salary sacrifice benefit gives employees a way to spread the cost of thousands of expensive home or tech products.
Whether it's smartphones, laptops, headphones, or washing machines, employees can:
- Save up to 8% on everyday items from IKEA or Currys
- Spread the cost interest-free straight from their salary across 12 instalments, with no credit checks
- Shop for themselves or their loved ones, and replace broken items.
Employee cashback card
Our research into changing shopping behaviours due to the cost-of-living crisis found that:
- - 61% are buying less expensive brands or generic store own-brand products
- - 52% are buying more products on sale
- - 44% are buying more products on promotion (e.g. save % or 2 for 1 offers)
One way to help with the cost of everyday purchases is to introduce the employee benefit, bYond, which allows employees to earn up to 15% cashback at more than 85 UK high street retailers and supermarkets, including Sainsbury's, Asda, Primark, and Marks & Spencer.
Not only could using bYond when shopping for household essentials give employees £500 cashback each year, but 56% of employees feel more valued at work because of their bYond card.
Employee discount scheme
Our research into cost-of-living shopping behaviours found that the use of coupons and vouchers went up by 10% between 2022 and 2023. That makes Extras Discounts an attractive employee benefit as it saves employees up to 15% on the cost of physical and digital gift cards. There are over 100 popular brands to choose from including H&M, Halfords, Costa Coffee, ASOS, Morrisons, and Spotify.
Commuting support
It's estimated that workers spend up to 20% of their salaries on commuting costs. It's no surprise then that over 80% of British workers are open to trying an alternative mode of transport. Here are three salary sacrifice schemes designed to give employees financial support with commuting.
Cyclescheme
This Cycle to Work scheme gives employees up to 470% off the cost of a new bike and accessories from over 2,000 retailers across the UK. Plus, it promotes environmentally-friendly commuting, encourages a more active workforce, and over 80% of Cyclescheme participants report feeling less stressed after cycle commuting.
Green car benefit
With over 60% of Britons concerned about fuel costs and more than half of younger drivers likely to switch to electric vehicles in the next decade, Green car benefit is the ideal solution. For an affordable monthly amount, employees can choose an ultra-low emission vehicle package that includes insurance, road tax, and MOT.
Car pooling
Encourage carpooling by implementing a car share initiative at work. As well as reducing employees' commuting costs, this will also foster a sense of community and promote a healthier work-life balance. To kickstart this initiative, launch a car share database so staff can easily connect with colleagues seeking a ride to and from their local neighbourhoods.
Gym membership discounts
Exercise can lower stress levels and boost productivity. Yet, a third of Brits are having to give up their gym memberships due to the rising cost of living.
To enable employees to afford to stay active, MyGymDiscounts offers up to 25% off memberships at over 3,000 leading gyms, fitness centres, and health clubs, including PureGym, David Lloyd, Virgin Active, and Fitness First.
Financial education and guidance
Just half of employees in the UK have access to basic financial information and educational content. Yet fostering an environment where employees feel able to have a conversation about money and their personal finances is key to employee financial wellness.
This could involve access to online financial planning tools and hosting bespoke workshops with financial advisers and debt counsellors on topics such as debt management, budget planning and cost-cutting tips, and how to set achievable savings goals.
Our employee life-quality app, syd™, is full of guidance. Powered by AI, the science-backed super-app delivers actionable, tailored advice to boost employees’ physical and emotional health and meet their financial and social needs. syd™ is like a personal mentor or life coach in your employees’ pockets. Employees using syd™ report a reduction in stress, anxiety and depression (48%), an increase in energy (23%), and an enhancement in overall life quality (20%).
Career progression opportunities
The CIPD recommends that employers provide opportunities for in-work progression. This is particularly important from a financial wellbeing perspective as a career development plan could lead to opportunities for employees to earn more.
Whether it's earning qualifications, in-person or online training, or mentoring programmes, giving staff ways to climb the career ladder and further their personal growth has been linked to job satisfaction, increased productivity, and employee retention.
Ready to nurture your employees' financial wellbeing?
Working together, there are simple, hassle-free, and cost-effective ways to support your employees. Our employee benefits platform, BHN Extras, provides practical ways to help employees save money and stretch their salaries further.
For more information on how we can help you help your employees, get in touch today on 0208 159 9430, via our contact page, or email enquiries@workplaceextras.com