According to a recent report, half (50%) of employees said they would like savings products that make it easier to save. It’s not surprising, really. The Wagestream State of Financial Wellbeing survey was conducted in November 2021, after two years of savings-depleting income shocks brought about by the global pandemic. But even before the pandemic, people were not doing brilliantly when it comes to saving. In 2016, for example, more than 16m people across the UK had less than £100 in savings.
Helping employees save is one of the most effective ways employers can make a difference in the long-term financial wellbeing of their people
Having savings is critical to financial wellbeing. Without savings, people are unable to respond to income shocks or unexpected expenses. It’s also harder to smooth income and cash flow on a month-to-month basis, which is especially important to hourly-paid workers who may have variable hours.
Helping employees save is one of the most effective ways employers can make a difference in the long-term financial wellbeing of their people. It builds financial resilience that continues to pay dividends as they go through their financial lives.
1. Challenge common unhelpful beliefs about saving
A lot of people think saving is pointless if you have debts. This is a particularly damaging belief if you have debts because those in debt benefit from having savings to avoid getting into more debt. Employers can signpost staff with heavy debt to services such as StepChange, which can not only help with managing the debt but also recommend a savings schedule to complement paying down the debt and help build long-term resilience.
2. Help employees crystallise their motivation
Most people understand the value of savings both to their objective financial wellbeing and to how they feel about money. This is generalised motivation. But we need specific motivation to save on a regular basis. Not spending the money needs to carry, mentally, more benefits than spending – and some people (not all) that struggle to save may struggle because they can’t tap it into this specific motivation. Internal money champions can help employees find what they’re passionate about – maybe it’s saving for their children to go to university or for a holiday.
3. Introduce products that help people to save
Those most needing to save, for example, those on variable pay, often find it hardest: often this is because it’s hard to know how much is ok to save from month to month. Automated savings products which can scale based on monthly income can take away a headache here. Equally, micro-savings products can help those intimidated by saving to overcome the first psychological barrier. Opt-out savings are an interesting new area which shows promise.
Just as having a gym buddy increases the likelihood of going to the gym, having savings buddies or saving within a group can increase the likelihood of success
4. Create a community to encourage saving
Just as having a gym buddy increases the likelihood of going to the gym, having savings buddies or saving within a group can increase the likelihood of success. Incentivising the saving by offering an employer-sponsored contribution will also increase the chance of success. These initiatives can be run company-wide or on a departmental level. Money champions are best placed to drive them, but if you package up the necessary tools to run them, it may be that other employees can pick up the mantle, improving inclusiveness.