6 areas of financial wellbeing your team must know

A quick summary:

  • Why is financial education important for employees? 💰
  • Everyday spending and saving 🤑
  • Understanding taxes 🤔
  • Debt management 💸
  • Financial abuse ❌
  • Pensions 💵
  • Benefits 🏆

Most of us have a decent handle on our general wellbeing, like exercising, eating healthy, and staying hydrated. But what about our financial wellbeing?

Yes, financial wellbeing is a 'thing'. But, more than this, it's a topic quickly gaining traction, especially as economic storm clouds loom. 

The Cost of Living Crisis is being felt in very real and tangible ways. Fortunately, companies are beginning to cotton on to this. After all, an employee isn't as happy, nor as fulfilled by their work and life, when money's on their mind. 

Now, there are several measures you can take to support the financial wellbeing of your employees. That includes educating them about how their money works.

A hand placing a coin into a piggy bank on a table
Why is financial education so important for employees?

So, why is financial education so important for employees? 

Right now, living paycheque to paycheque is the norm for millions of people. Even salaried employees are realising that a job doesn't equal complete stability. 

The cost of living crisis means that employee financial wellbeing is now an essential topic for every business. A report by Sky News puts it best: more people are more concerned with their finances right now than catching Covid-19.

With so much economic uncertainty, people are turning to their employers for support. If businesses don't get onboard, the costs could be huge. Almost half of employees say stress around money is keeping them up at night. It also means people are more likely to leave their current jobs if incentives, flexibility and support don't add up. 

There's clearly a lot of work for employers to do, from reshaping compensation packages to better supporting overall wellbeing.

But people want more than just a payslip at the end of the month - they also want the tools and knowledge to become financially empowered. 

6 Financial Topics to Educate Your Team On

As simple as it may sound, financial education is a severely underrated tool. It certainly won't fix every economic issue we face (that requires real systemic change). But a little bit of knowledge can go a long way.

To begin, here are 6 topics within financial wellbeing you can start to educate your team on (as well as some tips and suggestions for how to go about this).

A table with pound coins and bank notes on it
How everyday spending and saving impacts financial wellbeing

Everyday Spending (and Saving)

It's a simple thing that could pay dividends (too early for the money puns?) in the long run.

Most people in the UK don't have a solid grasp of their incomings and outgoings each month. In fact, nearly 39% of UK adults said they aren't confident managing their own money. That includes things like credit, active saving and keeping track of spending. 

That last one - keeping track of spending - can greatly impact employees. When people become more aware of how they spend their money, they can start to take back some control.

You can educate your workforce on developing better spending habits through workshops, seminars with external organisations or by providing access to budgeting tools and templates like Money Helper and Emma. You can even go a step further. For example, one-to-one sessions with a financial coach can help employees discover what works best for their situation while feeling heard and understood.

Taxes

A good relationship with money includes staying on the good side of the HMRC; in other words, paying your taxes in full and on time. 

But while tax management might seem like a pretty simple topic in the UK, thanks to the PAYE system, it can get a bit complicated for some employees.

For one, employees should have a basic understanding of how their taxes work. Do they know how their income is taxed? What about their personal allowances? Do they know how to make the most of these? One of the best ways to promote better understanding is by providing employees with a transparent payslip (like this).

Furthermore, some employees may need to complete an additional personal tax return, called a Self-Assessment. There are several reasons for this, such as having another source of income. Making employees aware of this responsibility will ensure they don't miss any critical deadlines.

Woman paying by card in a shop
Debt management and it's impacts on financial wellbeing

Debt Management 

In 2021, the number of UK households struggling with large debts rose by a third, an analysis that echoes past warnings about record debt levels. 

It's something that highly affects employees and, in turn, the small businesses they work for. A study by the Institute for Employment Studies reveals that 18% of employees experience stress due to financial liabilities.

So what can employers do to help? To start, you need to squash the stigma that surrounds debt. Providing a list of debt advice charities employees can reach out to is a good start. 

In addition to this, employees need actionable ways to tackle their debt. Financial coaching or educational workshops on debt management techniques such as avalanching, snowballing and balance transfers can help people consolidate and reduce liabilities that are causing stress.

Financial abuse

Let's turn to a more serious subject for a moment. 

Just like financial health, financial abuse is also a very real thing. And it's essential for people, including employers, to learn to recognise the signs.

Financial abuse is on the rise in the UK. It's also something that disproportionately affects women. According to UK charity Surviving Economic Abuse, one in six women have experienced economic abuse by a current or former partner. 

Make sure managers and HR staff know how to spot the signs:

  • Is an employee appearing more withdrawn or isolated than usual?
  • Are they frequently leaving their purse 'at home'? 
  • Is their salary being paid directly into a partner's account?
  • Are they being pressured to leave work (when they like their job)?

Secondly, you can signpost employees to charities that can help such as Money Advice Plus and Surviving Economic Abuse. Of course, giving your workforce access to therapy as part of their benefits can offer a safe and confidential space for employees to explore these issues and find additional support.

Pensions

Now let's look at a couple of subjects where employers can really offer invaluable support.

For one, employees need to understand how their pensions work. A recent poll by the Pension Professionals supports this - 43% of respondents indicated that it's the employer's responsibility to educate savers on workplace pensions. Furthermore, it's estimated that close to 12 million individuals are currently under-saving for retirement.

So, where can employers start? To begin, it's important to ensure employees actually know the basics. It takes on average about 30 minutes to explain how pensions work to someone. You could provide this information via video content or as an online resource using Notion. Depending on the different age groups of people you employ, you can tailor this content even more.

In addition to this, make sure contribution arrangements are clear and transparent for workers. There's nothing worse than someone realising they didn't know where their salary was going (or that they could have contributed more). 

Man looking at his phone and credit card
How to support financial wellbeing with employee benefits

Benefits 

Finally, there’s benefits. When it comes to financial education in the workplace this is a big area, and again responsibility for employers. 

That’s because they are far from being just 'ad ons' or 'nice to haves,'. Benefits play an essential role in modern compensation.  They're also one of the best ways to improve overall employee wellbeing. That, in turn, affects how employees show up and perform on the job as well as how they approach things like saving for their future.

Make sure employees understand what benefits they have access to. You could do this several ways. One of the best times to do this is during an employee’s onboarding, as employees are more fresh and open to taking on new ideas. Another way is through regular year-round refresher workshops or a benefits database or library people can search. Platforms like Heka can also streamline the process.

It’s important that education is a two-way dialogue - get regular feedback from your employees on which benefits they love, and which they’re not that hot on (or have just plain forgotten about!). That way you can continuously tailor what you’re offering and reduce wasted spend. 

The bottom line

There you have it - 6 areas of financial wellbeing you can begin to educate your team on. 

As we’ve explored, the cost of living crisis is not an easily solvable problem. But the more light you can shed on how your people’s compensation works, and what they can do to improve their financial wellbeing, the healthier and happier your teams will be. 

From everyday spending to tackling debt, taxes and more there are so many areas where your company can make a real impact. And, it goes without saying that transparency around pensions and wider benefits can really help employees take charge of their financial future.  

Credit: PayFit is the smart, simple and stress-free way to pay your people. Manage payroll, ensure legislation compliance and get dedicated support from real CIPP experts, all from one seamless platform.