Created: 04 July 2016
Financial Wellbeing: A Lot More Than Your Salary
When we think of financial health, we think salary. And yet salary is actually not the most important aspect. There are also factors such as how much money someone holds in savings and how prepared they are for retirement. But further to that, it is about how employees think about their finances: Do they feel in control? Do they feel aware of all the options? Or do they feel overwhelmed and helpless?
Often, it isn’t as simple as needing a pay rise. Research by the University of Essex found that improving financial wellbeing improved employees’ health scores significantly more than adding £1000 onto their monthly salary, regardless of their income level. Employers need to be able to help their employees to feel more positive about their financial situation, whatever that may be. There are endless statistics demonstrating the importance of this. For example, in a 2015 report, PWC found that nearly half of all employees find dealing with their financial situation stressful, and The University of Essex research found that the psychological effects of poor financial wellbeing are equivalent to the psychological pain of being completely unemployed or going through a divorce.
The bottom line business benefits of improving financial wellbeing are clear: poor financial wellbeing causes stress, of which the negative effects in the workplace are widely known. Barclays (2011) reported that 20% of employees feel their financial worries interfere with their work, and strikingly, PWC found that 37% reported spending at least three hours thinking about personal finance issues at work each week. Barclays also reported that 38% of employees said they would move to a company that prioritised financial wellbeing.
This is particularly relevant at a time where graduates entering the workplace are now starting their career with £27,000 of debt from university, often more. I very much relate to this, being in the first cohort of students that the higher tuition fees applied to. And whilst there is some comfort in feeling there is safety in numbers – if there are so many others in the same level of debt as me then it must be okay – thinking about it still leaves me quite uneasy. Again, this points to needing to change the way we relate to our finances when we cannot simply fix them, not allowing this aspect of our lives to negatively impact our psychological wellbeing.
Whilst there are increasing numbers of organisations beginning to realise the importance of addressing their staff’s wellbeing, financial health is still an area that is often overlooked. Here are some points to consider for employers aiming to incorporate this into their wellbeing strategies:
• The focus doesn’t have to be on salary. Employees with high salaries can still have poor financial wellbeing.
• It is worth the investment: less stress and distraction means better engagement, means ultimately more productive and effective workers.
• Employees are not all going to have the same financial issues. A recent graduate is not going to have the same concerns as someone approaching retirement.
Written by Emily Jarrett
Currently studying an MSc in Occupational Psychology, Emily is passionate about improving people’s mental health, especially in the workplace. She is excited to be studying the wellbeing of professional dancers for her dissertation, and also has experience in the area of assessment
Employee Financial Wellness Survey, Price Waterhouse Coopers, April 2015
Financial Well-being: The Last Taboo in the Workplace? Barclays Corporate and Employer Solutions, 2014
Taylor, Jenkins & Sacker (July 2011). Financial capability, income and psychological wellbeing, University of Essex Institute for Social and Economic Research