The number of people finding it hard to keep up with bills and credit commitments has doubled since the start of the pandemic, leaving many with an unsustainable burden of debt. Research from the Joseph Rowntree Foundation shows expenses are only set to mount, finding that households on low incomes will spend nearly on fifth of their income on energy bills by April.
With this comes a new source of stress and anxiety for employees, as well as a renewed impetus for employers to consider their staff’s financial wellbeing. Poor financial wellbeing can be a key contributor to several mental health conditions, and if left unchecked, it can start to affect employees’ ability to function at work.
To offer support during this time, employee benefits expert Sodexo Engage shares how to help employees stretch their salaries and improve their financial wellbeing.
1. Financial education
Historically, financial literacy has received little time in the classroom, leaving many unaware of the risks associated with certain financial products. In fact, research conducted by Profile Pensions revealed that one in four millennials find pensions confusing, and more than half (53%) wish their employer would explain pensions and benefits to them.
Through financial education, employers can turn the dial and play a key role in making their staff aware of the options available to them – not just while they’re in debt, but also by advising on preventative measures for the future. Offering calculators and cost comparison tools can help employees work out the best approach for them and how much cheaper an alternative could be to their existing credit cards and loans.
2. Financial wellbeing services
While nearly a quarter (23%) of employees report their organisation has amplified their focus on financial wellbeing in response to the pandemic, the CIPD only found small improvements in activity to promote financial wellbeing other than signposting people to external sources of advice.
There is no shortage of financial wellbeing initiatives that employers can provide to close this gap. For instance, helping employees to access a loan, which is paid back through their salary, could be a welcome first step to achieving financial security. It also means that employers can offer loans to a greater range of employees than the high street and help them consolidate any debts that may have accumulated. Additionally, Christmas savings clubs and holiday saving programmes are other tools that can help people plan for a large expenditure and offer financial resilience.
3. eVouchers and cashback cards
eVouchers and cashback cards are another effective way to maximise the spending power in people’s pockets and ensure your employees can benefit from discounts on things that they really want. In a Mastercard survey, 41% even said gift cards were the top item on wish lists in 2021, highlighting their value to consumers today.
Employers can also offer their teams a cashback card, which gives them a percentage of what they spend on a purchase back in their account. Cashback cards are more than just a way for employees to treat themselves but can go a long way in cutting down the costs of everyday expenses. For an employer, they can also be used to reward your staff by topping up their card instantly to celebrate anything from long-service, an on-the-spot reward, or a promotion.
4. Salary sacrifice schemes
Salary sacrifice programs can be especially beneficial for employees, and often make much-needed services far more accessible. Salary sacrifice allows employees to deduct a portion of their monthly pay and put it directly towards an essential expense, such as childcare, a railcard, a new phone, or private health services. In fact, over half of British businesses are leveraging the salary sacrifice benefits available for workplace pensions.
Through salary sacrifice certain services are much more attainable, such as childcare, may be available at a reduced rate compared to those offered to the public. Many of these services can be essential support for employees and not only minimises their financial woes but reaffirms their value to an organisation.
Jamie Mackenzie, Director at Sodexo Engage, comments:
“The enduring cost of living crisis has left many feeling the pinch, making it crucial that employers support their teams with a truly holistic approach during this time. While a salary raise may seem like the obvious solution, it’s not the only way to help employees with their finances. Whether this entails taking the time to educate their staff or providing benefits that help stretch their salary, employers should dig deep to ensure their workforce takes the right steps to financially secure their future.
“It’s important to bear in mind that money woes can also be a leading cause of stress and anxiety. It can often result in poor physical health too, such as sleep loss or stress-induced headaches. As such, financial education or salary sacrifice schemes also play a key part in ensuring the overall wellbeing of a workforce and should not be neglected.”