Many working Brits are living with an unnerving financial uncertainty, despite the majority having stable jobs with an income much higher than the national minimum wage. Low levels of savings and the lack of long-term financial planning exposes households to seek quick fixes to bridge their uncertain circumstances in life.
That’s where the idea of financial wellbeing comes in. A large number of employers already see this as an area where they need to focus their HR team efforts on, but most of the planned action is invariably only into education.
Is it because on one hand management realises that financial distress has an immediate impact on productivity and staff turnover, but on the other hand doesn’t want to tread into employee’s personal lives and finances?
When the two are so interlinked, it is time to stop sitting on the fence. As an employer, it is important to be part of alternative instead of relying on education alone.
A problem of Financial Resilience:
- More than 16 million people in the UK have savings of less than £1001. In 5 areas of the country, more than half the adult population have savings below that level. The areas are: North East England, West Midlands, Yorkshire and Humber, Northern Ireland and Wales. Not to say that areas like East Midlands and North West England are very far behind (47.9% & 47.4% respectively). Even in London, the capital and the financial hub, the number stands at 42.3% of the adult population with less than £100 as savings. Yes, you read that right.
- A Quarter (25%) of Britons have no money put aside for a ‘rainy day’, with 1/3rd relying on credit cards to pay for emergencies2
- Nearly 60% of Brits have less than £1,000 of savings
- Of those who do not have savings, for emergencies:
- 33% rely on credit cards
- 18% borrow from friends and family
- 20% pawn or sell something to raise the cash
The above shows that a large percentage of our workforce has no financial resilience to weather the ‘rainy day’. Add to that the fact that UK adults owe an average of £3,737, it makes saving even harder and a distant pipe dream for most.
In times like this, employers need to step up and offer actionable options to their employees, helping them to not just avoid expensive debt, but also to nudge them towards a long term behaviour change towards saving for the curve balls that life will invariably throw at them.
FairQuid’s partner employers are already bringing about that change by offering their employees options to consolidate their existing debt with their local, not for profit community Credit Unions (the original P2P AltFi providers).
This ensures staff have an ethical financial service provider to turn to. The bundled saving contributions ensure that they do not just have a small pool of savings by the time their debt is paid off but also brings in the behaviour change of contributing towards a ‘rainy day’ pool every wage/payroll cycle. The next time they need money in an emergency, borrowing is not the first option for them.
1 Millions have less than £100 in savings, study finds
2 Majority of Brits have less than £1,000 saved up / How much of a savings buffer do people need?