Category: Employee Benefit

Best Practice For Financial Wellbeing: Actionable Tools To Help Your Employees

It sounds cynical, but however much your employee loves their job, a big motivating factor in coming to work is the financial stability they get from it.

They exchange forty or so hours of their week for a wage that allows them to rent or mortgage a home, purchase food, drive a car, and have access to other services, including leisure activities.

When there is a risk to their financial stability, staff are unlikely to be motivated, and their efficiency is likely to be affected. Small amounts of stress aren’t necessarily considered a bad thing. Pressure to meet deadlines and targets could propel employees to do their best (as long as it isn’t applied too harshly or maintained for an extended period), and, theoretically, financial incentives such as commission for salespeople are more effective if they are appreciated – or necessary. However, stress, induced by money worries or otherwise, is likely to have a negative effect on an employee’s state of mind whilst working.

Losing sleep over money

Almost half of UK employees are worrying about their financial situation – and 18% are losing sleep over it. Stress prompts the release of adrenaline and cortisol, two hormones which can cause significant harm throughout the body, affecting mood, memory, blood pressure, heart rate, and the immune system.

Employees can hardly be expected to perform at their best under such conditions: 1 in 20 staff have been absent from work an average of 4.2 days a year due to financial stress-induced illness, with 49% of stressed employees taking sick leave compared to 36% of those who aren’t as worried about money.

Alongside the run-up to Christmas, this time of year is probably one of the worst for employees’ stressing about money. It has a negative impact on productivity and can lead to time off sick or some looking for a new employer.

With the news that Carillion, the UK’s second-largest construction company, has gone into liquidation, threatening the jobs of its 20,000 UK workers, it’s evident that our current economic climate poses risks to financial security. Even organisations that are seemingly doing well can do more to prop their employees’ sense of financial well-being. Only you and your senior managers can take steps to ensuring your employees’ jobs are safe – but what about implementing other security nets?

Financial well-being services (that won’t cost a penny)

Many companies offer financial benefit packages – but employees are not always aware of what they can take advantage of. Bonuses are one benefit, but others might include investment opportunities, share schemes, and other ways of profiting from the success of the company.

One tool for promoting well-being at work is to make yourself an employer that is approachable, particularly when it’s a sensitive issue. Employees struggling with money might benefit from an advance on their wages, a loan, or asking for a wage increase; but often, they are embarrassed to broach the subject. Many people also believe that management will be unsympathetic to their concerns, with some even thinking that it could affect their prospects if they ask for more money.

Even if you are unable to help, remember to remain sympathetic, and perhaps point them in the direction of alternatives, such as a FairQuid employee financial well-being savings or debt consolidation solution.

Inflation coupled with the stagnation of wage growth has seen a narrowing of disposable income. The first quarter of 2017 saw disposable income, adjusted by inflation, shrink by 0.4% – the greatest drop in almost three years. As households feel the pinch, they are more likely to rely on credit cards or turn to payday loans to fund their spending. With high interest and missed payment charges, the amount being paid back can quickly add up and be in excess of what was originally borrowed.

Saving for a “rainy day” has always been considered worthwhile: a few pounds every week can soon grow into a fund that can be dipped into in emergencies.

However, the fourth quarter of 2016 saw the lowest savings ratio since records began in 1963, falling sharply from 5.3% previously to 3.3%. The ratio, which represents how much of a household’s disposable income is set aside for saving, increased in 2017 back to 5.5% and standing at 5.2% in the latest reported quarter of Q3 2017 (see chart below). However, it is still falling short of previous years like 2015, which saw highs of 9.7%. It seems that British homes are struggling to set money aside from their disposable income.

A sensible, proactive solution

A FairQuid savings account, with partner Credit Unions, is designed for your employees. Rather than an employee taking money from their disposable income – what is left after bills, food, and rent is paid for – to put into their savings – the money is taken directly from their wage even before they receive it.

Instead of savings being relegated to “whatever’s left over” at the end of the month, it is the first outgoing, so it can never be spent, whether accidentally or on purpose. In fact, since the employee will never hold the total amount (that is, their wage including the savings), they are less likely to miss it.

With one cost already removed from their consideration, employees can budget more effectively with what is left over. And, since they are part of member-owned credit unions, participants can benefit from healthy dividends on their savings – so paying in also pays out.

Creating financial security is about more than creating more disposable income for your employees. Peace of mind contributes to a healthy body, a focussed mindset, and an overall happier outlook.

sources:
Financial Well-being: The last taboo of the workplace? – Barclays
Financial well-being: the employee view – CIPD

The Holiday Hangover

How repayments and debt consolidation can help your finances recover

January: a financial wasteland month. All the fun and excitement of Christmas has worn off, and what we’re left with is the financial implications of the seasonal excess.

It was expected that last Christmas the average UK adult would spend £243.77 on Christmas presents alone, a 1.4% increase from last year. This figure, of course, excludes the additional costs of the holiday that are often neglected from the gift buying budget, including the dinner with all the trimmings plus the decorations. In total, the Christmas spending was estimated to increase by 1.3% since 2016 reaching £821 for an average family, while the household saving ratio has dropped to a record low level of 5.2% in Q3 2017 (see the chart below).

Most adults also buy more alcohol and nibbles, outfits and decorations than normal – and that’s just entertaining at home, without factoring in those end-of-work parties and pub get-togethers.

Excessive debt everywhere

Once Boxing Day is over, the festivities don’t end: New Year’s Eve and Day are just around the corner, with excess expected into early January. So it’s no surprise that Christmas can hit our wallets hard, despite our best intentions.

Last year it was reported that roughly 50% of Brits would be paying off 2016’s Christmas a year later, and there’s nothing to suggest that the same won’t happen this year. With anxieties about providing the “perfect Christmas”, including satisfying children’s wishes for must-have presents and hosting family events, it’s understandable that we go all out to ensure everyone has a good time. And there are meals out, day trips with the kids, nights out with friends … it all adds up.

But when the party’s over, how can we regain control over our runaway finances – and exert better control over them for next time?

Christmas on credit is becoming alarmingly common, with a third of Brits either borrowing money or buying items on credit to be paid off later. The UK is struggling under an alarmingly high £200bn of personal debt, with 35% of that attributed to credit cards.

Making affordable repayments on these after an exuberant Christmas can often mean paying a minimum sum – sometimes just enough to cover the interest payments, meaning that we’re stuck in debt for longer. Sometimes we can free ourselves from debt just in time for next Christmas, and just in time for new credit spending, and so we find ourselves trapped in a cycle of borrowing and repaying.

With so many credit options to choose from, including store cards, credit cards, and payday loans, it can be tempting to borrow a little here and a little there – which makes it harder to keep track of where the money is going, and how much the interest is adding up with varying APRs.

Consolidation loans

A consolidated loan is a simpler way of managing debt. Once those variable interest cards and loans are paid off, you’ve left with easily-monitored credit: one monthly payment, one fixed rate. With only one monthly outgoing, you’re less likely to miss a payment and incur fees, and, even better, you can have it taken directly from your wage. That way, you’re less likely even to notice the deduction from your monthly allowance (or to accidentally spend it).

FairQuid Credit Union consolidation loans also come with a savings account starting from £10 a month, so even while you’re paying off the expenses of last Christmas, you can be preparing for the next one, or saving for a holiday.

With a savings account, the cost of paying for next Christmas is spread out in advance over the year – but without interest rates to worry about. The double benefits of a consolidation loan and a savings account mean that not only can you pull yourself out of debt, but you’re well-prepared for larger costs, expected (like the Christmas holidays) or unexpected (why do boilers always seem to break down on the coldest week of the year?).

New Year resolutions can often be vague, such as promises to work out ‘more’ and to ‘do better’ with money. To Start Saving with FairQuid is one concrete method of keeping your finances in order. It takes back control of your debt as well as taking charge of your savings, and when it’s all done directly from your payslip, it’s one resolution that is easy to keep.

When you plan ahead, not only can you escape the almost-inevitable sinking into debt to prepare for Christmas, but the holidays themselves become more enjoyable without that pressure of worrying how it will all be paid for later. After all, Christmas is a time for celebration, not for contributing to anxiety about money in the new year. Start Saving today

Bank of England Rate Rise: Will it Help Save More or Cost You?

In November 2017, the Bank of England announced that it was raising its base interest rate for the first time in a decade, from the record low 0.25% to 0.5%.
Will it help you save more?

When it comes to savings, you’re not going to see a massive influx of extra savings interest, but anything extra always helps. With most ISA interest rates hovering around the 2% mark, we’ll probably see an extra 0.25% return – another £2.50 per £1,000 each year, or £22.50 instead of £20.

How Will It Cost You Money?

This depends on the type of credit you already have and whether you have a fixed or variable return rate.
Most common, smaller types of debt – such as credit cards, store cards, and unsecured personal loans – have fixed terms for repayments set out when you sign up, which won’t be affected by the new base rate. If there are going to be interest rate changes, the company will contact you directly to make you aware of what these changes are and when they will take effect.

How Will Your Mortgage Be Affected?

With a mortgage being possibly the biggest monthly outgoing, this is the biggest concern for most people. How your mortgage repayments are affected depends on the type of mortgage you took out:

Fixed rates

This offers a set sum to be paid every month for a determined period (one, two, three, five, or ten years). These often have the most expensive rates and fees since they offer stability and reliability: However much the Bank of England’s base rate varies, you will never pay more (or less) than agreed.

Your fixed rate mortgage should not be affected by the base rate change. However, once the period has expired, you will be subject to the lender’s SVR (Standard Variable Rate), which is affected by the base rate, unless you take up a new mortgage deal.

Standard variable rates

These are interest rates set by the lender and are subject to change at any time. They loosely follow the Bank of England’s base rate but don’t reflect them exactly: For example, with the base rate increase of 0.25%, your lender could increase standard variable rates by 0.5%.

Tracker rates

These are directly correlated with a base rate, “tracking” at a certain level above. This is usually, but not necessarily, the Bank of England base rate.

For example, if you rate is tracked as 2% above the Bank of England base rate, it has just risen from 2.25% to 2.5%. However, some lenders use other base rates, like the LIBOR interest rate, which is higher than the Bank of England rate, due to the higher risk. Like fixed rates, tracker rates are normally only in place for a few years, and then your mortgage will revert to the (typically higher) standard variable rates.

Capped Rates

These can be either fixed, standard variable, or tracker, and react accordingly (or not) with the base rate, but they come with a guarantee that they will never exceed a certain amount. As long as this cap is not being exceeded by the 0.5% increase, then your rates will still fluctuate (or not, depending on if your rate is fixed or variable) with the base rate.

Time to start saving and reduce debts?

With savings rates back up and interest rates on the increase, and more rises expected in the future, 2018 could be the year to start saving and clear away debt before the base rate gets any higher. And if you want to get rid of all your debts, you could consolidate them and reduce your monthly payments, whilst paying into a savings account at the same time. Already debt free but want to take advantage of a savings account? Put a little aside each month straight from your salary payments and take control of your savings.

The Bank of England Interest Rate Rise: What this Means For Your Staff?

The Bank of England announced that it was raising its base interest rate for the first time in a decade, from the record low 0.25% in August 2016 to November 2017’s 0.5%. How will the rising base rate affect your staff?

Higher Mortgage Payments

Approximately half of mortgage-paying homeowners are going to have a little less disposable income each month.

Out of 8.1 million mortgaged households, the BBC identifies 3.7 million (46%) as having a tracker or standard variable rates, both of which are influenced by the Bank of England’s hike in the base rate.

Although SRV’s may follow base rate trends (increasing a little as the base rate increases and vice versa), they do not follow it exactly. Tracker rates, however, directly correlate with the Bank of England’s rate, and so those with a tracker rate mortgage can expect a 0.25% increase in their payments.

According to UK Finance, the average outstanding balance on a UK mortgage is £89,000, meaning a tracker-based increase of about £12 a month. However, many homeowners are preparing to lock-in fixed rates, with predictions of another two increases coming over the next three years, bringing the base rate up to 1%.

More Savings … Right?

It makes sense that a higher Bank of England base rate would automatically equate to a greater return on savings accounts and ISAs. Well, not necessarily. Newcastle building society has said it will pass on the 0.25% increase in full to all its savers, whereas for Nationwide users, the “majority” will benefit from “improvements.”

Even if a bank does offer the increased rate, the extra 0.25% on £1,000 (the minimum amount recommended as emergency savings) is £2.50, which is a small incentive for holding money for a year.

Spending, Not Saving

The low-interest rates of the previous years have encouraged debt and inhibited saving. Most people have felt that, what was the point in putting money away for a couple of pounds when it could be being spent in the here and now?

And with bank interest rates low for loans, it seemed there was a glut of spending beyond our means. But now with the higher base rate (and its potential to continue climbing), it’s time to be a little more savvy with our personal finances before they become out of control.

A Different Way to Save

Money worries have a direct impact on productivity, mental health, absence and even a decision to go elsewhere. Employees work for money: to pay their mortgages (with the newly inflated prices) or rent, pay off debt, save, enjoy themselves and treat their families.

Employees stressed out by not having a “financial cushion” to fall back on can become anxious and less productive with their minds on other matters, whether that’s paying off existing debt or saving for emergencies or special occasions. Our Credit Union savings account is a useful tool for employees to put aside as much or as little as they like every month – and at no cost to your business.

Worried about too much debt as Christmas fast approaches?

Debt and fitness are so similar, in many ways.

Almost everyone with debt – not counting mortgages – dreams of being debt free. People who want to get fitter dream of ideal goals and the time when they can walk into a shop, buy what they want and feel amazing.

Both are a lot harder to achieve than dream about.

And even when you are on the road to achieving your goals, there are some times of year when it gets considerably more difficult.

Right now, with Winter setting in and Christmas fast approaching, most people’s diets, credit limits and wallets are going to suffer.

Debt up, savings reduce

Even if you don’t have children, Christmas is an expensive time of year, with presents for families, loved ones, friends and colleagues and dozens of excuses for “treats”, trips away, work meals and parties and nights out chipping away at credit card spending limits, bank accounts and anything you’ve managed to save this year.

Almost everyone puts saving and diets and fitness plans on hold this time of year. Vowing to double-down in January and commit to what you’ve been trying to stick to since earlier this year, maybe even January 2017.

At this time of year, debt levels – which have been rising steadily all year – go up further. Savings, which have been falling all year, reduce further. Low-income families struggle even more, which can be made more difficult if anything unexpected happens, such as a surprisingly high bill or someone loses a job. We’ve seen banks, credit card companies and other lenders take out more and more county court judgements (CCJs) against customers in 2017, which we expect to get worse over the next few months and into next year.

How to start saving and reduce debts

Instead of waiting until January, start solving these problems today.

If you’re in too much debt and want to consolidate, there is a solution.

If you want a little extra money this time of year but you’re worried about your credit rating, we do have an answer.

If you want to start saving, do it now; don’t delay.

With FairQuid Credit Union financial wellbeing solutions, you can consolidate, borrow a little more if needed and start saving today. Providing you’ve been with your current employer at least one year, you can take out a loan with an automatic savings account and payments will come directly from your salary the same day you get paid.

All you need to do is ask your employer to signup to this scheme – it won’t cost them a penny – and our Credit Union partners can offer you a loan with an inbuilt savings account. Eligibility criteria apply. Find out more today.

Helping employees on the property ladder: What can you do?

We see headlines about “the housing crisis” almost every few weeks. On the news, online and in newspapers, we are living through one of the worst housing shortages in generations.

This crisis comes down to an overlapping range of complex factors. In the UK, we don’t have enough housing stock to meet current demands. House prices are also more expensive than they’ve ever been, compared to income, with average prices seven times incomes, making saving for a deposit difficult, if not impossible for many young people.

At the same time, millions of people have become “accidental landlords” supporting “generation rent.” In some cities, such as London, they end up renting out a large house to multiple tenants as a result of high property and rental prices.

Beyond Generation Rent

For numerous reasons, people can end up owning more than one property, which by 2021 is where 21% of families (over 5 million households) are going to live. Private rented accommodation, often when the landlord relies on the rent to cover a second mortgage or ensure they can afford the mortgage on their primary residence, is fast becoming the norm for millions of individuals, couples and families.

Estate agency, Knight Frank commissioned a YouGov survey of 10,000 tenants which also involved speaking to 26 investors and property companies. It found that far more people over 50 are renting than most imagine, with “40% of renters pay more than 50% of their incomes on rent, the report found.”

The report also projects that those reliant on social housing will increase to 4.3 million by 2025 unless more action is taken to resolve the housing crisis. Social housing is also under strain, with Shelter, the housing and homeless charity, reporting that 50,000 households are homeless, often moving between temporary and emergency housing whilst waiting for social accommodation.

With Brexit on the horizon, the second largest investor in UK social housing, the European Investment Bank (EIB), has stopped putting £1 billion annually into social housing, either until talks progress, or permanently. Nobody knows, and until recently, the government has been slow to come up with an alternative solution.

What can be done about housing?

This persistent housing crisis is one of the biggest barriers to social progress in decades.

When past governments helped people onto the property ladder, it spurred forward consumer spending, saving and job creation. Now we don’t have enough properties, forcing people to spend more they can afford on rent, making it increasingly difficult to save for a deposit to get on a property ladder that seems out of reach for many.

The government is taking some action. Help to Buy, which offers affordable equity loans for new homeowners (worth up to 20% of a property’s value), is being given another £10bn government funding extension. In the recent budget (November 2017), the government announced the new housing scheme, aiming for 300,000 homes within 7 years, whilst also abolishing Stamp Duty for properties up to £300,000 in England, Wales and Northern Ireland.

Prime Minister Theresa May, also recently announced a £2bn which should pay for 25,000 more social properties.

Employers can also help solve this problem. It doesn’t take radical action or giving staff huge bonuses. In fact, it won’t cost anything; but it will make your team feel more valued, more likely to stay with your company and less stressed about money knowing they are putting funds aside that will help them buy a house.

With FairQuid financial wellbeing solutions, staff can save money more easily, with savings payments coming directly from the source, going into a savings account they can use for a deposit – or put into a government-backed ISA that can work alongside a Help to Buy equity loan.

As an employer, you can do something about these issues (whilst also ensuring your staff are more productive and engaged) – thanks to FairQuid Credit Union savings accounts. Best of all, these won’t cost your business a penny. Find out more today.

Putting Nobel Prize Winning Nudge Theory in Action With FairQuid

Richard Thaler won the Nobel prize for economics in 2017 for his contributions to behavioural economics. His ideas, known as “nudge theory” could play an important role in encouraging staff to reduce debts and save more, which improves retention and reduces recruitment and training costs.

Nudge theories have already been put into practice across many countries.

In the UK, Thaler’s belief that when policies are skewed towards people’s long-term self-interest, have already positively impacted pensions, reduced smoking and increased organ donation.

Championing the concept of “nudging” people was behind the government’s 2012 pensions auto-enrolment policy that meant private businesses and employees needed to opt-out rather than opt-in. It has successfully and massively increased private pension contributions.

Nudge Theory in Action

In 2010, the behavioural science and economics professor at the University of Chicago was part of the coalition government “nudge team”, which explored everything from vaping to energy and organ donations. Known as the Behavioural Insights Team, it’s credited with encouraging 100,000 extra organ donations and persuading 20% more people to shop around for a cheaper energy provider.

The theory achieved widespread attention when Thaler co-wrote a book with US professor Cass Sunstein in 2008: Nudge: Improving Decisions about Health, Wealth, and Happiness. Since then, nudge concepts have been put into practice around the world in the public, private and charities sector, many times with resounding success.

Not that they are without critics. Some on the right say they’re too paternalistic, even when they achieve results that help those directly involved and the public. Whereas, some on the left claim these concepts are neoliberal – concepts popular during the Bush administration – since they rely on individual choice instead of overt state action.

Although popular with academics and governments, we need to see how these theories could be applied in the workplace. Could nudge theories help employers retain more staff, reducing talent acquisition and training costs?

In our view and with the experience we have had with employers, we know they can. FairQuid is putting nudge theory into practice.

Staff and Employer Benefits

Far too much data exists to show that people in the UK are in more debt than ever and are saving far less than we should. We are, unwittingly, leading ourselves down the same road that led to the last global recession.

Too much debt and not enough savings directly impacts employees. Staff are stressed about money. This won’t affect all of your team all of the time, of course, but once a percentage of your staff are worried about money often enough it will impact productivity, absence rates, stress levels and illnesses. Especially this time of year, in autumn and winter, when the need for money is greater (Summer is gone, and Christmas is approaching) and colder weather makes people more likely to get colds and flus.

What happens when existing credit limits prevent staff from spending much more, yet they need more for presents and other seasonal costs?
One of two things: People try and borrow more, which could mean payday loans, or they look for a new, better paying job. Either way, you lose a member of staff, or stress and absence rates increase as a result of larger debt burdens.

There is another way. With FairQuid, we offer consolidation loans that include a savings account and savings products. Financial wellbeing for staff, which costs your business nothing. Below is a table outlining what happens when someone takes out a consolidation loan that automatically includes a savings account.

(1.) Christmas is approaching. A customer spends too much, pushing them further into debt since they haven’t had time to pay down debts since the Summer.

(2.) They are offered FairQuid Financial Wellbeing products at work, taking out a consolidation loan that gives them a little extra credit whilst paying off existing debts and opening an automatic savings accounts. Funds are taken directly from source, so they get used to budgeting a new amount whilst reducing their debts and starting to save.

(3.) In time, debts are fully paid off, and savings continue, which is what 90% of FairQuid Financial Wellbeing customers do after they clear their debts.

That is, one of the ways, how we can help you put Nobel prize-winning ideas into action, which means employees don’t look for a new job and are less stressed and more present at work.

As an employer, you can do something about these issues (whilst also ensuring your staff are more productive and engaged) – thanks to FairQuid Credit Union savings accounts. Best of all, these won’t cost your business a penny. Find out more today.

Are you saving money for Christmas: Is there an easier way?

Let’s face it, saving money for Christmas is not easy.

And if you don’t just have the cash in the bank – who does, right? – most people need to borrow extra in the run-up to Christmas, then spend the first few months of next year paying it off. For some people – up to 11 million according to research in The Independent – Christmas 2017 could still be costing them interest charges one year later.

Between food, drink, parties, stocking filler, presents and last minute dashes to the shops, research estimates that Christmas could cost “anywhere between £750 and more than £1,500 per adult.”

No matter what you earn, that is a lot of money going on a few days worth of fun. Hence the popularity of savings clubs, where you can put money aside over the year, then spend those vouchers on food, drink and presents. Not that you won’t incur some extra expenses as the big day approaches, but at least you’ve spread the cost.

Is there another way to save for Christmas?

Some people would say setting money aside throughout the year is the most sensible option.

The problem is, we are not a nation of savers. We spend. We take out credit. We don’t pay it off; instead, it accumulates and costs us even more over the year. Statistics don’t lie, not when it comes to our national savings habits. In fact, you might be surprised to learn that 70% of adults in the UK have little to no savings.

Debt charity, StepChange, recommend having at least £1000 set aside in savings – which might just about cover the cost of Christmas. In reality, families earning less than £1,500 per month (after tax) often have less than £100 in savings, making between £750 and more than £1,500 for Christmas a huge expense.

Thankfully, there is another way – one that doesn’t involve taking money out of your account and putting it into savings after being paid. It is something your employer can help with: Employee benefits savings accounts.

Here at FairQuid, we work with Credit Unions and employers to provide savings accounts for staff. All you need to do is ask for this as an employee benefit. Once your company is signed up, you apply for a savings account. And then, every month, money goes straight from your salary – like childcare, pensions or travel to work schemes – into this savings account.

What about when you need to withdraw money?

It works exactly like any other savings account. You control it.

Our Credit Union partners will give online, phone and branch access, and most come with debit cards too so that you can withdraw funds anywhere. You can also increase or decrease the amount that goes into the savings account; just ask HR or your manager before payroll cutoff. It’s as easy as that. No need to worry whether you’ve set aside money for Christmas – it happens automatically, every month.

Start saving with a FairQuid Employee Benefit Savings Account. Find out more.

Why Employers Should Be Worried About The UK’s Debt Time Bomb

In 2010, the outgoing Chief Secretary to the Treasury left his successor a note. It famously read:

“I’m afraid there is no money.”

At the time, he wasn’t joking. UK government borrowing was at record highs.

Since then, coalition and contrastive governments have committed to cutting the deficit. A robust, many would now say, an overly stringent set of fiscal policies have reduced the deficit from a record £154 billion in 2009 (around 10% of GDP) to £52bn in March 2017 (2.6% of GDP).

Unfortunately, at the same time, consumer debt has increased since 2012.

Consumer Debt Time Bomb

In the past five years, consumer debt – which includes mortgages, loans, credit cards, store cards, car finance and student loans – has grown 7.3%, adjusted for inflation. During that same period, wages have only increased 0.7%, which means more people than ever before are turning to credit to treat themselves, go on holidays, even pay household bills.

One reason for a larger debt burden is rising house prices, which means a considerable amount of this debt, around £1.3 trillion is tied to property which is increasing in value. However, £201.5 billion of the UK’s total debt – £1.63 trillion – is unsecured, through credit, store cards, loans and overdrafts, with the latest figures for July 2017.

The number of customers in arrears, an indicator of financial distress and an inability to afford credit, has also increased. Over the last five years, council tax, water and electricity bill arrears has increased around 12% to a combined total of £5.3 billion. There aren’t accurate figures for arrears in other areas, including rent and phone bills, but the rise in CCJs and bailiff action are strong indicators that families are struggling to cope with too much consumer debt.

If this is all sounding scarily familiar, as if we’ve lived through this nightmare before, you wouldn’t be wrong. In many respects, the UK economy is approaching potentially worrying economic waters. Experts note that “the ratio of household debt to GDP heading back towards the peak seen in the boom years before the financial crash.”

The outgoing German Finance Minister Wolfgang Schäuble has warned that “risks arising from the accumulation of more and more liquidity and the growth of public and private debt” could cause a new financial crisis. Germany, unlike other Eurozone countries, is running a trade and government surplus, currently sitting at £16.8bn for the first half of 2017.

Why Employers Should Be Concerned

Work directly impacts home life, and what happens at home never always stays at home.

As much as employees and employers try, when one area of our life is out of balance – such as our personal finances – it impacts everything else. Debt causes stress. Stress causes staff to take time off. A cold or flu isn’t always caused by a virus: stress colds are similar, in many ways, but anxiety is the main cause, with a lack of money, savings or too much debt one of the reasons employees need to take time off because of stress.

Not only do people take time off, but employees can be present whilst being mentally checked out. Coming into work so focused on something else that they aren’t productive is nearly as bad as an employee taking time off as a result of stress. In either case, your team and potential customers are affected.

Another risk is that they look elsewhere for work. When debts mount, one of the seemingly easiest ways to reduce them is to try and earn more. If your company isn’t raising salaries, then they could start looking for a new job to gain the pay rise they need to get debts under control.

Is There A Solution?

Thankfully, there is a solution, and it won’t cost you a penny.

Not every employer can raise salaries quickly, or give out loans, or directly step in when staff are struggling. Nor is it your role as an employer to do that. Not every practical financial workplace benefit needs to come from your HR budget.

Providing practical support, such as employee benefit credit union accounts, is far cheaper – free for businesses, in the case of FairQuid – than watching staff struggle, lowering productivity and even jumping ship.

As an employer, you can do something about these issues (whilst also ensuring your staff are more productive and engaged) – thanks to FairQuid Credit Union savings accounts. Best of all, these won’t cost your business a penny. Find out more today.

Save Money An Easier Way With Employee Benefit Savings

Saving money is not easy.

It isn’t easy during Summer, whether or not you have kids – there’s always something to spend it on. And then Winter is just as bad.

Come Spring, most people are either rebuilding what savings they had or paying down extra credit card debt after the Holidays.

Not to mention all the other expenses most people encounter throughout the year, no matter how well you budget. There is always something to spend money on. If you don’t have savings, then this is often something you know you should have, but actually saving money is a different matter entirely.

Don’t worry if you find saving money difficult. You aren’t alone. In fact, you might be surprised to learn that 70% of adults in the UK have little to no savings. For most families, even those with two paycheques and working tax credits or another government benefit for employees, getting to that £1000 in savings can be a struggle.

Debt charity, StepChange, recommend most people have at least £1000 set aside in savings. But in reality, families earning less than £1,500 per month (after tax) often have less than £100 for emergencies. Even those earning more put spending on credit cards, juggle zero percent interest offers, take out store cards and loans instead of saving than spending. We aren’t a nation of savers anymore.

Why doesn’t anyone save money?

Easy, or relatively easy – depending on credit scores – access to credit is one reason. The higher cost of living and lower real wage increases are another. Inflation is rising faster than wages, and Brexit, unfortunately, has made some imports more expensive as the value of the Pound has fallen compared to world currencies.

At the same time, the other reason most people don’t save is pretty ordinary. For most of us, when the money hits our accounts, a lot of it goes back out on bills. Then you have real or imagined pots of cash for different things that don’t all go out at once, such as food, petrol or bus fare, clothes, and some cash for treats. Everything is allocated. There usually isn’t that much set aside for savings, and if there is, chances are it gets spent on something else. You get paid again, and the cycle repeats itself for another month.

Is there a way to start saving?

Yes, yes there is. It doesn’t take a lot of effort, and it’s something your employer could help with: Employee benefits savings accounts.

We work with Credit Unions and employers to provide savings accounts for staff. All you need to do is ask for this as an employee benefit. Once your company is signed up to FairQuid, you apply for a savings account, it gets set up, and every month money goes straight from your salary – like some childcare, pensions or travel to work schemes – into this savings account. Instead of trying to take money out after getting paid, the savings automatically increase and people soon get used to budgeting a different amount every month.

What if you want to withdraw money?

It works exactly like any other savings account. You control it. Our Credit Union partners will give online, phone and branch access, and many may come with debit cards so that you can withdraw funds anywhere. You can also increase or decrease the amount that goes into the savings account; just ask HR or your manager before payroll cutoff. It’s as easy as that. No need to worry whether you’ve set aside money for savings – it happens automatically, every month.

Another benefit are the dividends. Interest charged to those who borrow from credit unions is paid back to everyone who is a member – which includes everyone with a savings account. Once the profit is calculated, that is paid out as dividends to savers.

Start saving today, with a FairQuid Employee Benefit Savings Account. Find out more.