Research from Aegon UK finds that the number of British employees facing money worries increased by 5% since 2018 to 74% of all employees.
The survey which was conducted prior to the coronavirus outbreak (December 2019) highlights a potentially worrying trend, given the situation is likely to have deteriorated further in recent months. It also found that money is the most common distraction among UK employees, followed by health and then family problems and that 45% of employees experiencing money worries believe the quality of their work suffers as a result.
The research builds on Aegon’s 2018 study on the financial wellbeing of employees which set out to understand people’s control over their finances, their ability to respond to unexpected financial expense, and their ability to meet financial goals and make choices that allow them to enjoy life.
Worryingly, 29% of employees said that feeling under prepared for a financial emergency is a key cause of their money worries, alongside ongoing financial obligations such as bills and the cost of living.
13% of employees now report issues with their productivity at work as a result of money worries, a rise of 2% since 2018 (11%). Among these employees 25% said that it took nearly twice as long as usual or more to complete a routine task at work compared to a regular day.
The number of people taking more than twice as long as usual to complete a routine task at work compared to a regular day has also more than doubled from 5% in 2018 to 12% in 2019.
Financial worries were more common among employees working for smaller companies with less than 250 employees where 32% reported they were just getting by financially compared to 27% in companies employing more than 250 people.
Linda Whorlow, Managing Director of Workplace at Aegon UK said:
“It’s really concerning that even prior to the coronavirus outbreak more people were facing money worries. The current situation will no doubt intensify these concerns for employees and will be putting the financial wellbeing of many people at risk.
“With nearly a third of employees feeling under prepared for a financial emergency, the impact of the pandemic will be the ultimate test of financial resilience for many. While some employees might be in a position to make positive changes to their finances through saving on childcare or travel costs, others will not.
“A lot of people and businesses have been helped financially by the government during this time, but once these measures come to an end, employees could turn to their employers for support and guidance.
“It’s key that during such a crisis, employers communicate and inform their employees about the services and support available to help them assess their options.
“Ensuring that employees know the employee benefits they have access to might help them navigate their finances this difficult time.
“And pointing employees in the right direction for the financial guidance and advice they need, could help employers get the best results from their workforce. If money worries are addressed, employers will see better employee focus and productivity from employees.”
6 financial wellbeing tips for employees
1. Budget, plan and track your spending
Assess your spending, plan your goals and set a budget to meet those goals. Ensure you have the best deals on all of your expenses such as utilities, phone contracts and car insurance. The information you gather at this stage will help you get started but it should be reviewed on a regular basis to ensure you stay on track.
2. If you can, save
Savings are essential to building financial resilience. Does your employer offer a payroll savings scheme? There might be some financial benefits to making the most of what is available through your employer. If you are already doing some saving, review and check that you are saving in the most efficient way for your circumstances.
3. Avoid borrowing if you can
Borrowing is ok if used for the right reasons and as long as the repayments can be met. Avoid short-term, high interest borrowing if possible as this can often just push someone further into debt.
4. Are you entitled to any government support?
Depending on your circumstances you might be eligible for some forms of government support. For example, if you have children you might be able to claim Child Benefit if you aren’t already. It’s worth checking.
5. Long-term planning
Pensions aren’t likely to feature high on the priority list when you are struggling with your financial situation but it’s never too early to start saving for the future and most workplaces provide the necessary tools to do this. Everyone is entitled to a workplace pension so take full advantage of the benefits your employer offers, they will help you cultivate a long-term plan to improve your financial wellbeing in the future.
6. Prepare for the unexpected
Preparing for the unexpected could come in the shape of a savings pot or rainy day fund, or it could be taking out appropriate financial protection such as life insurance, critical illness cover or income protection. Check with your employer first to see if these are available through your workplace. If not speak to a financial adviser who will be able to assess your needs and sort you out with the right products at the right cost for your personal circumstances.
5 ways employers can help improve financial wellbeing in the workplace
1. Provide information and tools about managing financial wellbeing
Signpost financial education, guidance and advice services and provide access to money management tools and apps to help.
2. Remove the stigma – provide manager training
Poor mental health is often related to poor financial wellbeing. Financial wellbeing and mental health are heavily interlinked and both have a stigma attached to them. Employers could help reduce this stigma by providing training to managers to support people with their financial concerns and mental health.
Provide training for managers to better understand the causes and consequences of financial worries and provide the tools to support employees who are struggling.
3. Encourage pension saving habits
Thinking about the future is a key part of financial wellbeing. Encourage employees to make the most of the pension savings available through the workplace. This is one of the simplest ways an employee can save for the future and the action of planning for the future will help reduce fears surrounding their ability to retire comfortably.
4. Reduce the hidden costs of employment
Costs incurred through the workplace can often exacerbate financial worries. Whether it’s business expenses or the social expenses of work, it helps for managers to have an awareness of the anxiety this could be causing to employees and find ways to address it.
5. Offer your employees affordable credit through the workplace
While taking on more debt is not generally recommended, employers could offer short term loans or make credit available through payroll, helping employees avoid fees, charges and being taken advantage of by scammers.
Financial Wellbeing report 1. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,007 adults. Fieldwork was undertaken between 19 – 25 July 2018. The survey was carried out online. The figures have been weighted and are representative of British business size.
Financial Wellbeing report 2. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,000 employees. Fieldwork was undertaken between 5 – 16 December 2019. The survey was carried out online. The figures have been weighted and are representative of British business size.