Somebody once said that money can’t buy you happiness. And if the findings of a new report from Barclays are anything to go by, they weren’t far wrong. The report, Financial Well-being: The Last Taboo in the Workplace?, has challenged the widely-held belief within organisations that financial health is determined by level of income. On the contrary, it reveals that the key to increasing an individual’s financial well-being is improving their financial capability and encouraging savings.
The report, based on a survey of over 2,000 employees across Britain, finds that the size of an individual’s ‘savings buffer’ – a pot of money set aside for unforeseen outgoings – and contributing regularly to savings have a far greater impact on financial well-being.
Across all income levels, over half (55%) of respondents with a savings pot that would last less than two weeks were found to be experiencing financial distress or discomfort. However, only 8% of those respondents with a savings pot that would last for at least three months reported such such financial discomfort. And among those with a savings buffer of at least three months and a more modest annual income of less than £20,000, only 11% of respondents reported suffering any problems.
What can business owners learn from this though? Well, the report went on to reveal that financial distress and discomfort can have an extremely negative impact on an employee’s productivity and could even cost organisations 4% of their payroll. Meanwhile, 18% of employees said that they often lose sleep while worrying about their finance with a further 20% admitting that financial problems interfere with their work.
Such is their position as the first line of authority, it seems abuntantly clear that the onus is on employers to tackle the thorny issue of personal finance with their workforce. However, it seems that the first step will be to stop living in denial. According to the report, 69% of employers believed employees felt their company is concerned about their financial well-being, but in reality this is a belief shared by only one in ten employees. Indeed, almost one in five (17%) employees said they would value more guidance from their employer on managing their finances.
The report suggests that better education and workplace support is required to help alleviate financial concerns among employees. It went on to find that 59% of employees fall into the ‘balancing’ financial health category; they are focusing on managing their current financial situation instead of saving for the future. Even more worrying though were the one in ten (11%) employees in the ‘slipping’ category. These employees have no savings and regularly spend more than they earn. It’s therefore easy to see how a bit of education could go a long way for all parties.
“It is clear that simply providing someone with a steady salary does not ensure good financial well-being,” said Katharine Photiou, head of workplace savings at Barclays Corporate and Employer Solutions. “Employers need to broaden their role by helping to improve employee’s capacity and capability to manage their personal finances, through education and guidance, by enabling employees more easily to manage their finances at work and through specific solutions provided in the workplace.”