For the past five years, I have written an annual review of workplace financial wellbeing for HRZone (see last year’s article here).
Throughout all of that time it feels like there has been no let up for employees.
Even before the pandemic and the cost-of-living crisis, it was clear that financial wellbeing was being eroded for millions – if not the majority of employees.
In 2024 your entire strategy should be focused on how you get more money to your people.
Financial strain persists
It was around ten years ago that I first started talking and writing about workplace financial wellbeing. At the time, I struggled to engage employers as helping people with their money issues at work felt too paternal.
While a decade later that stigma has eroded a fair bit and employers are now far more comfortable with the concept of workplace financial wellbeing, we are still missing the mark.
Just like with wider workplace wellbeing, you would expect that as more support was made available to employees, their problems would decline. But that hasn’t been happening in the financial wellbeing space. Which means one of two things.
- The problems are actually never going to be adequately supported by employers
- Despite the growing number of providers in this space, they aren’t actually doing much good
I suspect the answer lies somewhere between the two. So while there are parts of the financial wellbeing cycle that are effective and meaningful, in 2024 your entire strategy should be focused on how you get more money to your people.
It’s one of five steps on my financial wellbeing journey, but is the one that requires the most attention in 2024.
Putting money in people’s pockets
One of the biggest issues I have with most of the talk around financial wellbeing is that it appears to be heavily laden with the idea that people are struggling because of something they have done.
We have seen the UK Government suggest that people should be getting better at budgeting and saving more. That the reason why they are struggling is entirely of their own doing. And I think the industry has been speaking in similar ways. Hundreds of cost-of-living articles I’ve read are about “how to budget better” or “how to use the 40/20/20 rule for saving”.
Not only is it unfair to suggest changing habits is the way out of this crisis, but it’s also just not true.
Even by late 2023, when we were being told there were “signs of recovery” and that fuel bills were starting to fall, in October 52% of UK adults reported an increase in their cost of living compared to previous months.
In September 2023, the Resolution Foundation re-projected that real incomes fell in 2022 and 2023 and will stagnate into 2024. This would mean a combined two year fall in real household income of 4%.
I don’t think our strategy should therefore be how we help people make the most of what they’ve got. Instead, financial wellbeing strategies should be focused on how we get more money into our people’s pockets.
Proactively helping people’s financial stress will positively impact physical and emotional wellbeing too.
Five financial wellbeing ideas every employer should consider for 2024
It is impossible for you do anything about the causes of high prices. It may not even be possible for you to increase wages, in which case I think we have to be a bit more creative in how we get more money into people’s pockets.
1. Rising costs will still be a threat to health, so prioritise money in your wellbeing strategy
A third of Brits aren’t eating as healthily because of the crisis, while 16% have cut down on regular exercise. Half of employees say that the cost-of-living emergency has limited their ability to participate in leisure activities (e.g. eating out or going to the cinema).
These actions will all harm overall wellbeing in the long run.
Finding ways to support employee financial wellbeing this year is also about how you support overall wellbeing. Your wellbeing budgets and resources should be directed in part towards helping people with their finances. Proactively helping people’s financial stress will positively impact physical and emotional wellbeing too.
2. Budget shopping will be a long-lasting legacy of the crisis. Help your people to spend less
The data tells us that shoppers are moving away from mid-market brands to more budget-friendly options and this could become a permanent trend, according to the latest Deloitte Consumer Tracker.
This year 64% of consumers have switched to cheaper brands in the UK. Employee discounts will once again become a common feature of the ways in which an employer can support putting more money into people’s pockets.
3. Encourage employees to stop taking riskier decisions. Put better choices before your people
The Buy Now Pay Later (BNPL) provider Klarna saw one million new British users in 2023 despite consumer warnings. Almost 10% of insurance customers say they have “stripped back” their cover as a result of the crisis, with 43% of those cancelling cover completely.
Employers can offer the tools that take people away from risky options like BNPL schemes, nefarious lending and payday loans.
Can we get people access to affordable credit to avoid them going down more unsuitable and perhaps unstable routes?
The data tells us that a squeeze on finances has led to a higher proportion of people dying “before their time”.
4. Mood boosting employee benefits will be on the rise. Help people live fulfilled lives on the cheap
What is often ignored by those telling people to spend less and budget more is the importance of life experiences to our wellbeing.
Social activities, time spent away from work and opportunities to decompress are all vital parts of our wellbeing. Cutting them out to improve financial wellbeing means that mental and physical health will decline. I believe experiences that give people memories will become more important in 2024, especially when costs can be discounted and spread over 12 months through the employer.
Benefits that enable people to achieve higher emotional wellbeing and connectedness while also supporting spending less can only be a good thing.
5. Employees need help with housing costs. Release some of the pressure with new benefits
UK consumers have experienced “record levels” of worry as 81% of renters and 79% of mortgage holders concerned about escalating prices. While house prices in the UK are slowing, rent is increasing. The UK annual private rental price growth rose to 5.7% in just the last 12 months. It’s now much higher than it’s been for a decade.
Employers should be not only helping renters with deposits or rent in advance, but they should also encourage more mortgage switching.
This is serious, and it isn’t just about money. It’s about huge changes in people’s living standards.
UK consumers typically overestimate the difficulties of switching mortgages. But recent studies have also shown that most people who don’t switch mortgages also underestimate the benefits of doing so.
Switching is so easy and effective at putting more money in people’s pockets that Cambridge University’s research has found that the Government should be doing more to encourage consumer confidence to move providers more regularly. This last year I’ve helped add mortgage switching to many employer benefit schemes and even saved money using it myself.
This isn’t just about money: The crisis is a significant blow to overall wellbeing
The cost-of-living crisis has been so substantial that it has had a bigger impact on consumers than the pandemic did. The data tells us that a squeeze on finances has led to a higher proportion of people dying “before their time”.
The number of those dying before the age of 75 will increase by 6.5% as a direct result of the pandemic. Two thirds of under 24-year-olds have said they have had to lower their career expectations because of the pandemic. Some of the most deprived parts of the UK may see nearly 70 more annual premature deaths per 100,000 due to the ongoing cost of living crisis, according to one study.
This is serious, and it isn’t just about money. It’s about huge changes in people’s living standards.
Financial wellbeing is a core part of our overall wellbeing and I will say now the same thing I said last year: if you aren’t supporting your employees financial wellbeing in 2024, you aren’t supporting their wellbeing at all.
