The Psychology of Financial Wellbeing
How to increase happiness in your company
According to the Office of National Statistics, there has been a dramatic downward shift in the average rating of life satisfaction, anxiety and happiness in the UK. 2020 marks the first year where the numbers have worsened from the previous years findings. They found that anxiety levels rose by 6.3% (which is the highest level recorded), and happiness levels fell by 1.1%.
People are understandably feeling more stressed, and managing finances has been at the foreground of most people’s minds, especially the closer we get to Brexit and the longer we face local Covid-19 lockdowns. The mental load of financial worries can be heavy; triggering a range of issues not just mentally, but physically too. Plus, the knock on effect of poor financial wellbeing in your employees to your business can be harsh. A recent study by Barclays found that one in ten employees are silently struggling financially.
When it comes to the effects of poor financial wellbeing, your employees are likely to be experiencing a range of emotions:
Not to be confused with guilt, shame comes when you feel like you’ve let yourself down. This is common amongst people who are struggling with their finances because they feel personally responsible for not earning enough money, or because they are not ‘good with money’ and have a tough time budgeting. They feel embarrassment tied to their lack of financial prowess, and this in turn can lead to them making unwise decisions when it comes to money, or to them not seeking appropriate help at the right time.
Some people feel “scared” of dealing with their money. They don’t want to face the reality of their money, so instead they practice avoidance. They will continue to do what they’ve always done, for fear of having to confront a reality that is difficult to fix. This can lead to spiraling debts, lack of savings or a general lack of financial security. Fear stops them from making progress.
A classic case of keeping up with the Joneses can make your employees adopt spending habits that are not suitable for their actual lifestyle, but for the one they would rather be living. Envy adds more stress because they’ll never actually achieve true happiness by acquiring more things, and are more likely to get more debt.
It’s said that to achieve long-term happiness, you need to have a high level of financial wellbeing. This looks like:
Being on track to meet all your financial goals, having financial freedom, being able to withstand shock costs and to be able to cover your monthly spending comfortably.
All of which are achievable, for everyone, as long as they have the know-how and support from the appropriate sources.
Aon has found that ‘71% of employers believe they have a responsibility to influence employee health and change behaviour” and that “62% of respondents also saw employee financial wellbeing as their responsibility” which shows that businesses are aware of their impact on their employees financial wellbeing, and resulting overall life happiness. It’s hugely reassuring that companies want to break the cycle of negative emotions and behaviours. Employees are responding well to company benefits that support their financial wellbeing, especially if it’s done in an authentic and sincere way where your employees get real value, and it doesn’t come across as for the sole benefit of the company.
Some ways you can help your employees:
- Communicate and encourage your employees to use the financial wellbeing solutions that they have access to as part of their company benefits package. Make sure everyone knows how to access and use their company benefits. Also consider making it clear how they will help them. Here at Bippit we offer our partners webinars, guides and other employee training/comms that gets their employees engaged with the platform.
- Encourage open discussions about money, debts, investments and budgeting. Make your workplace culture a safe-space for talking about money. It’ll help your employees to reduce the stigma they may feel about talking about money. At Bippit, we offer Financial Wellbeing Lunch & Learns, which is a great first step to help your employees learn how to improve their financial health and start talking about money.
We all want our employees to feel motivated, secure and confident in managing their money, so that they can dedicate their time at work to productive output, and not to worrying about money. It’s on us to ensure the environment they work in, even at a distance, is collaborative, open and supportive. We’ve created a handy guide to Financial Wellbeing which is packed with more practical information about how you can support your employees. To find out more please get in touch – we are here to help!