Salary Finance’s financial wellbeing research found that money worries have a negative impact on areas that are top priorities for most HR teams: productivity, retention, absenteeism and employee mental health.
Those with money worries are:
- 7.6 times more likely to not finish daily tasks
- 2.2 times more likely to be looking for another job
- Taking 1.5 sick days a year due to financial stress
- 3.8 times more likely to have anxiety and panic attacks
- 4.9 times more likely to suffer from depression
Frightened of finance
We found that there are a large number of potential sources of financial stress. Our survey showed that one of the most common reasons people aren’t actively improving their financial literacy is because they find finances to be a scary topic. For some, simply budgeting throughout the month can be a challenge. We found that 34 per cent of people regularly run out of money before payday and this is strongly correlated to money worries.
One of the main reasons for financial stress is a sense of not being in control. This was true across all salary bands. Higher levels of pay did not protect people from financial stress:
|Income||Regularly run out of money||Worried about money|
|<£15,000||43 per cent||49 per cent|
|£15,001-£25,000||38 per cent||43 per cent|
|£25,001-£40,000||32 per cent||37 per cent|
|£40,001-£60,000||29 per cent||36 per cent|
|>£60,001||33 per cent||38 per cent|
Measure financial wellbeing and creating a benchmark
At Salary Finance we use a Financial Fitness Score, from 1 (not in control) to 5 (financial freedom), as a measure of financial wellbeing. The score is based on 10 questions about saving, borrowing and spending habits.
Although salary is a factor, we discovered that it isn’t as simple as more money equalling a higher score, and better financial wellbeing. Almost a third of people getting a higher Financial Fitness Score earn less than £25k pa and 25 per cent of the people getting lower scores earn more than £40k pa.
The average Financial Fitness Score for the UK is 3.1. However, only 17 per cent of people have a score of 3. Instead, there are large spikes at 2 (31 per cent, no freedom to enjoy) and 4 (41 per cent, plan in place).
This is an extremely important insight to keep in mind when creating your financial wellbeing strategy. The groups of people who score 2 or 4 have very different attitudes and behaviours when it comes to money. It is this difference in the way they think and their habits that is the strongest influence over their financial wellbeing.
For example, the correlation between regularly running out of money before payday and money worries is even more evident when viewed through the lens of the Financial Fitness Score.
|Financial Fitness Score||Regularly run out of money||Worried about money|
|1||97 per cent||82 per cent|
|2||71 per cent||69 per cent|
|3||10 per cent||29 per cent|
|4||10 per cent||22 per cent|
|5||0 per cent||8 per cent|
The implications for your financial wellbeing strategy
For a financial wellbeing strategy to be most effective it needs to help those that are struggling with the highest levels of financial stress. On average 36 per cent of people working at a company are likely to score 1 or 2. It is this group who are experiencing the biggest problems as a result of their low financial fitness.
We recommend that everyone involved in developing your wellbeing strategy understands the Financial Fitness Score and uses our calculator to find out their own score. Someone who scores 4 or 5 will think and act differently to those scoring 1 or 2 and will also value a very different set of financial wellbeing benefits. Understanding where you are in relation to others can bring hugely important context when developing the strategy.
With this understanding, you can then make sure you include employee benefits that help those with lower financial wellbeing in your strategy.