Myth: Financial wellbeing = financial education
Although financial education is fundamentally important, knowledge alone doesn’t enable change. The difference is head vs heart:
- Financial education is the knowledge and tools to understand your finances (calculating APRs, doing budgeting and planning).
- Financial wellbeing is about your behaviours, spending, borrowing and saving habits and how they make you feel.
Myth: It’s an employee problem and not one an employer can fix
In reality, 40 per cent of people are worried about money. These people are:
- 880 per cent more likely to have sleepless nights;
- 760 per cent more likely to not to be able to finish daily tasks;
- 600 per cent more likely to have a lower quality of work;
- 220 per cent more likely to be looking for a new job.
Our research has found that the cost to businesses in lost productivity, absenteeism, increased leaver rate and training costs is 13-17 per cent of payroll.
Myth: Employers that have a mental wellbeing strategy don’t need a financial wellbeing strategy
Financial wellbeing has a major influence on overall wellbeing and has a big impact on mental health. The shocking findings from our 2018/19 survey revealed that those with financial worries are:
- 380 per cent more likely to suffer from anxiety and panic attacks;
- 470 per cent more likely to be depressed.
Financial and mental wellbeing are too closely connected for either to be addressed independently.
Myth: Financial wellbeing is all about income
In reality, financial wellbeing impacts people across ALL pay levels.
In our 2018/19 survey it was the lowest and highest earners that had the most financial stress. Financial wellbeing is actually directly linked to an individual’s borrowing, saving and spending habits and not earnings.
Myth: It’s a problem for a minority of financially illiterate people
Financial wellbeing is actually much more complex and related to attitudes and habits. Salary Finance uses a financial fitness score from 1-5, based on 10 behavioural questions, to measure employees’ levels of financial wellbeing.
Even though the average UK score is 3.1, the highest percentages lie at score 2 and score 4. These groups behave very differently.
- Typical 2s would rather spend rather than save;
- Typical 4s save first and then spend.
Salary-linked products can enable 2s to become 4s
Salary-linked loans build credit scores by making it unlikely an employee will ever miss a payment and reduces risk of default
Salary-linked savings ensure people save first and spend what’s left over, helping to build resilience just like 4s and 5s.
For more information on how to build your financial wellbeing strategy watch our 30-minute webinar.