Equipsme HR Guide – Financial Wellbeing

When people are worried about making ends meet, they’re clearly not able to be as effective or as focussed at work. Financial problems can mean people lose sleep, or are contending with cold and hunger - all of which can impact their physical health. They will also be under considerable stress, itself one of the leading causes of sickness absence. There is a clear link between financial problems and mental ill-health which goes both ways - with money worries causing anxiety, and mental ill-health affecting people’s ability to manage their finances well.

Addressing financial wellbeing is about more than just paying employees and providing a few benefits. Organisations need to have a clear strategy for how they’re going to identify, deal with, and support those individuals experiencing financial strain.

Financial Wellbeing in numbers

• 1 in 8 people¹ are currently experiencing in-work poverty
• 47% of adults² reported that their cost of living had increased compared to a month earlier
• 40% of people³ are finding affording their rent or mortgage payments were very or somewhat difficult
• 29% of adults⁴ in the UK could not afford an unexpected but necessary expense of £850
• 91.8%⁵ of people are concerned about rising prices
• 60%⁶ - the number of the UK’s lowest paid workers who’ve used a foodbank in the last year
• 39%⁷ - the number of low paid workers who have skipped meals
• 39%⁸ - the number of low paid workers how have fallen behind on household bills
• 21%⁹ - the number of low paid workers who have taken out a pay day loan to cover their essentials
• 1.5 million¹⁰ people experience both debt problems and mental ill health
• 28% of people¹¹ already say money worries have impacted their work performance
• £120 billion¹² - the estimated cost to the UK economy of financial worries due to lost productivity
• 18%¹³ - the number of organisations with a wellbeing strategy that actively focus on financial wellbeing

What can businesses do about financial wellbeing?

1. Awareness and training

Boards, executives and even managers are clearly less likely to be feeling financial pressure than lower paid workers, and helping them understand the scale and impact of the problem is essential. That might mean training, particularly for line managers, to help them spot those who might be struggling, and understand what internal measures they can implement - and what external support they can access.

2. Identification

According to CIPD, two out of three organisations¹⁴ don’t have the data to understand their employees financial challenges, and only 20% ask their employees¹⁵ about it at least once a year.

Financial wellbeing should be included in regular staff surveys to help organisations understand and map the pressure their workforce is under. HR and team leaders can also look out for signs, including concentration, performance and sickness absence – and provide oversight data about groups or individuals who are more at risk – including people who are part time workers, renters, carers, and single parent families.

3. Creating a strategy

Once you have data about financial wellbeing within your organisation, it’s time to put in place policies to support it. That might include things like regular salary reviews and benchmarking, and taking personal financial problems into account in performance management reviews. It could also look like offering overtime opportunities, allowing people to cash-in benefit entitlements or adjust pension contributions, flexibility on pay days, on hours to accommodate a second job - or on the use of on-site facilities like showers. It may also be possible to do things like offer advanced paycheques to cover large unexpected costs - or to make changes to how often expenses are reimbursed.

4. Education

More than half of employers identify poor financial literacy¹⁶ as a major financial wellbeing risk factor. Talking about financial issues at work needs to be normalised – particularly right now. That should involve financial education – for instance detailing government support schemes on your intranet, posters on toilet doors about debt, introducing your new financial wellbeing policy in employee newsletters - or running full financial wellbeing workshops.

Whether it’s general advice, debt counselling or top saving tips and pension tricks, make it easy for people to get to the right place and people to help them do something practical to do about their situation.

5. Support

It’s also time to remind your people about the other benefits you provide – and encourage take-up and use.

That includes for things like Equipsme’s stress support line, provided by our partners Health Assured, whose services include debt counselling, family issues and elder care support. It’s an add-on that more than 33% of businesses choose to take out with us, to help support their team when they need it most.

Great resources for employees:

Step Change
Citizens Advice
National debt line
Money Saving Expert
Money and pensions service

Sources:

1. www.cipd.org/uk/knowledge/guides/employee-financial-well-being/#how-can-you-develop-an-effective-employee-financial-wellbeing-policy
2. www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/expenditure/articles/impactofincreasedcostoflivingonadultsacrossgreatbritain/julytooctober2023
3. www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/expenditure/articles/impactofincreasedcostoflivingonadultsacrossgreatbritain/julytooctober2023
4. www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/expenditure/articles/impactofincreasedcostoflivingonadultsacrossgreatbritain/november2021tomarch2022
5. www.healthassured.org/blog/mental-health-survey-2023/#:~:text=91.8%25%20of%20people%20are%20concerned,helpline%20over%20the%20last%20year
6. www.livingwage.org.uk/news/inflation-eases-cost-living-crisis-far-over-low-paid-workers#:~:text=Despite%20inflation%20easing%2C%20workers%20on,their%20income%20on%20these%20necessities.
7. www.livingwage.org.uk/news/inflation-eases-cost-living-crisis-far-over-low-paid-workers#:~:text=Despite%20inflation%20easing%2C%20workers%20on,their%20income%20on%20these%20necessities
8. www.livingwage.org.uk/news/inflation-eases-cost-living-crisis-far-over-low-paid-workers#:~:text=Despite%20inflation%20easing%2C%20workers%20on,their%20income%20on%20these%20necessities
9. www.livingwage.org.uk/news/inflation-eases-cost-living-crisis-far-over-low-paid-workers#:~:text=Despite%20inflation%20easing%2C%20workers%20on,their%20income%20on%20these%20necessities
10. www.moneyandmentalhealth.org/money-and-mental-health-facts/
11. www.cipd.org/globalassets/media/knowledge/employee-financial-wellbeing_tcm18-113886.pdf
12. www.cipd.org/uk/knowledge/guides/employee-financial-well-being/
13. www.cipd.org/uk/knowledge/guides/employee-financial-well-being/#how-can-you-develop-an-effective-employee-financial-wellbeing-policy
14. www.cipd.org/uk/knowledge/guides/employee-financial-well-being/
15. www.cipd.org/uk/knowledge/guides/employee-financial-well-being/
16. www.cipd.org/uk/knowledge/guides/employee-financial-well-being/

All our information is desk-based research from credible sources only, including the NHS and medical/disease charities

Date reviewed: June 2024