Without doubt, many have faced serious hardship over the past year. But as a nation, however, and for a multitude of differing reasons, we have managed to save billions more than usual in 2020. In fact, £148bn was saved in the first three quarters of 2020 according to the Office for Budget Responsibility.
With this in mind, as we ease out of lockdown, we’ve been told to expect a spending surge. So, what will the new spending versus saving landscape look like? Will those savings habits be short-lived and, crucially, how should HR be encouraging good personal savings habits?
Better financial wellbeing in the workforce has no end of undisputed benefits enabling employees to feel less stressed and more in control. With 77 per cent of employees saying that money worries are affecting their work, it’s an ideal opportunity for employers to step up and provide their staff with the right tools to look after their financial wellbeing.
But the key question is, does the employer have a role to play in helping their employees manage their money? And, while there is no legal obligation to do so, there is arguably a duty of care to consider.
Again, looking at the numbers, many households have managed to cope over the last year. This has for many been due to the lack of spending. From haircuts being done at home, wine costing £7 a bottle not a glass, and the only travel expense being wear and tear on the carpet. Yes, our heating and electric bills have gone up (a lot) but, aside from that, we have all been forced to learn what control is when it comes to money.
As lockdown eases these expenses will come back for us all. Yes, employers are seriously considering a more flexible working environment, but they will also want to have their employees back in one place – whether it is for a day or two a week or, for some roles, even more. Season tickets, fuel, lunches, after work drinks, new clothes – it will add up as the country readies itself to re-emerge from the darkness and make the most of the summer.
So, how long will it be before an employee says they cannot come in for financial reasons? We know that even before lockdown, the number of employees taking time out for financial concerns was rising. What we don’t yet know is the impact it will have next.
For those that can’t afford it but have no choice, will they forgo their TV subscription or start to slowly top up a credit card? For those who didn’t get their bonus this year, how are they now going to clear that debt as they have done in previous years?
There are many ways that we will all be impacted. A surge in spending is good for the economy as long as we, as individuals, keep one foot firmly on the ground and don’t overspend. While not overspending, the same OBR report also cited Bank of England research, which highlighted that around two thirds of those that managed to save over the last year, will simply be leaving their cash on deposit in the bank – with negligible returns.
Not always the best possible course of action once a financial safety net has been established if there is debt to be paid off or a more profitable course of action could be taken. I believe that this is another strong indicator that financial advice of any kind is a hole in most people’s support network.
Having a coach, a guide or even an advisor (they are not just there to help you invest your thousands) is a start. Unfortunately, as these can often cost the employee, it can be an immediate blocker.
For employers, however, there are cost effective ways of providing support to all – from those struggling to people who just want a helping hand or a sense check on what is best for them. The outcome we all want is to come out of this with heads held high having learned from the last 12 months about ourselves, our work-life balance and our finances. As employers you can help. You do already with Employee Assistance or gym membership so look to finances too.
More money is most likely not an option at the moment and, if not on the right track, it is not the answer either. Goal setting to focus on a positive future and then expert advice to look at how you reach them is.
Employers up and down the UK are realising that they can play a key part of this. Providing the support because you care, and then using data to further help those groups who have specific needs, is caring and delivering on an unwritten moral duty. Ignoring it could potentially cost both you and your employees a lot more further down the line when we should be encouraging our employees to maintain the savings habit, not to kick it.
James Malia is director at MyEva