Money talks | Financial wellbeing: It's not what you know, it's what you do.

Financial wellbeing: It's not what you know, it's what you do.

The Employer’s Guide to Financial Wellbeing 2019-20 is our second annual survey designed to help employers to understand how financial wellbeing affects their people and business.

This year’s research has confirmed the urgent need for employers to prioritise financial wellbeing programmes for those with low financial wellbeing.

Financial wellbeing and pay

The research found that 36% of UK employees are feeling financially stressed. It is a common assumption that financial stress is directly related to pay, but the survey has shown that just isn’t the case.

Perhaps unsurprisingly the highest levels of financial stress are with the lowest earners, but the surprising discovery was that the people with the next highest levels of stress were the highest earners. Those earning less than £10,000 per annum have exactly the same level of financial stress as those earning more than £100,000 per annum: 46% are feeling financially stressed. Financial worry is not always going to be eliminated by pay rises.

Financial education and budgeting

Financial wellbeing is often less to do with how much money you’re earning and how much financial education you have, and much more to do with your ability to actually stick to a budget.

Another common misconception is that people with low financial wellbeing don’t know how to create a budget. In fact we found that less than 5% of people don’t know how to budget. What we have seen is that it’s less about knowledge and more about behaviour. It’s not the setting of a budget that is the issue but sticking to it.

A tale of two worlds

Although financial wellbeing can mean different things to different people, the majority of us fall into two groups.. The research has found a group of natural ‘Planners’,who find it easy to save first and spend later and a group of ‘Copers’ who are more likely to spend first and save what’s left over - which is usually very little.

Copers are regularly running out of money before payday and start to fall back on high-cost credit like payday loans, overdrafts and credit cards. They are also left financially vulnerable during usually positive life events such as maternity and paternity leave. 40% of Copers struggled to pay bills during this time and 29% say they took on more debt.

What employees want the most help with

Those with low financial wellbeing value getting out of debt and becoming better at savings above everything else. They know what they need to do to improve their situation, but feel stuck in a financial prison and do not have the means or systems in place to get out.

Many financial wellbeing benefits have focussed on those with higher financial wellbeing. This research shows that, to have the biggest impact, employers need to expand their financial wellbeing benefit offering to ensure they are fully inclusive across their workforce.

You can read the rest of the research, and find out the six steps to implementing a successful financial wellbeing programme, by downloading a copy of The Employer’s Guide to Financial Wellbeing 2019-20 here or click the button below:

Download our Guide

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