As organisations focus on ways to improve employees’ mental wellbeing, financial wellbeing should be prioritised
More than 20 million people in the UK cannot manage their money, 11.5 million have less than £100 in savings and nine million are in serious debt, according to the Money and Pensions Service. While organisations are now starting to pay more attention to employees’ mental health and wellbeing, a similar level of attention needs to be directed towards improving employees’ financial wellbeing too.
The Covid-19 pandemic has meant some employees are on furlough or may be working reduced hours, resulting in lower pay than usual. This situation means employees are likely to find it harder to save money or to pay for food, utilities, and bills. During challenging times for employees, organisations must make sure that employees have the knowledge and skills they need to look after themselves and their financial wellbeing, but how can employers and payroll teams help employees improve their financial wellbeing?
The first step is to communicate with employees. Payroll teams should come together with senior leadership and HR to talk to employees in staff meetings (or one-to-one meetings) and find out what they currently do/don’t know about financial wellbeing or to find out what they are struggling with in terms of handling their finances.
Employees should feel comfortable enough to discuss ways that they want to improve their financial wellbeing, but senior leadership need to first create an open space for employees to do so.
After identifying the areas that employees want to improve on, organisations should then take action to improve financial wellbeing.
In 2019, research found that 36% of employers offer financial education to all staff and 26% of those that do not are considering introducing it. Two-thirds (62%) of those that provide financial education deliver it through face-to-face seminars, while 57% use an intranet site, 43% offer online tools and modellers, and 23% use web-based seminars.
Organisations should focus on building up and improving employees’ financial knowledge so that they can easily understand their finances and what it means. Payroll teams should work alongside HR to bring in financial wellbeing experts who can run virtual or in-person sessions on financial literacy and education.
If employees are unable to attend expert-led sessions, or if you cannot schedule the sessions, you should work with the L&D team to ensure that relevant learning tools about financial education are available for employees to access in their own time.
Organisations should also provide access to a range of financial products and services, including payroll-linked savings tools, to help employees manage their money.
Income streaming – which allows employees to draw down some of their already earned wages before payday – is a way of helping employees better manage their finances and avoid relying on expensive payday loans. By turning to providers such as fastP.A.Y.E, employers can receive full control as to how much they make available and how many times a month an employee can withdraw funds from their paycheque.
By working with Wagestream, you can also help to prevent employees from entering cycles of debt – you can allow your employees to access a percentage of their wages as they are earned and pay them straight into their bank account. Employees can also stream their salary directly into a savings account, and access financial education all through Wagestream’s app.
Improving employees’ financial wellbeing is crucial during times of change, and payroll teams must therefore be willing to work alongside other departments and providers to give employees the knowledge, skills and support they need.