How financial education can help employees make their money go further

  • Employers may want to consider giving employees practical help that includes debt management, budgeting and top tips for saving on everyday spending.
  • Educating employees with basic skills like budgeting and saving for a deposit for a first home can also provide help in other areas of life.
  • Other benefits like discounted shopping vouchers and bikes-for-work schemes can enable further savings for employees and help mitigate the rising costs of living.

The recent emergence of the cost of living crisis in the UK has plunged many people into financial uncertainty, as they watch energy, food and fuel prices soar. Research from Aviva’s December 2021 report, Evolving in the age of ambiguity, highlighted that more than two in five employees (43%) do not feel like they are financially on track to live the life they want in the future, with just 35% showing signs of practising good saving behaviours. What can employers do improve this and to make workers’ money go further?

Financial support tools

Some employees could benefit from having a better understanding of money, but are often confused about where to start.

Jonathan Watts-Lay, director at Wealth at Work, explains that some UK employers are using either virtual or face-to-face seminars to help their employees understand key financial issues such as budget planning and debt management. “Getting employees to think about how they spend money on everyday items such as utility bills is essential, particularly given the cost of living crisis of which energy costs are a big part,” he says. “One-to-one guidance or financial coaching sessions could be delivered via a video call or via the telephone, which is particularly useful for those who need more support and to gain a deeper level of knowledge around their finances.”

Employers may want to consider giving employees practical help such as top tips for saving on everyday spending. This can help staff make their pay packet go that little bit further, says Ben Pollard, CEO and founder at Cushon. “Many bank account apps allow [individuals] to create separate pots where [they] can put money in and save with a specific goal in mind. They are great for helping employees allocate their savings and give them greater control over their finances and helps them stay on track with their saving goals,” he says.

With employees facing higher levels of financial stress and potential situations of debt, employers can play an important role in helping them to cope. This could come in the form of an employee assistance programme (EAP) or through organisations dedicated to offering debt support.

Francis Goss, director of organisational wellbeing consulting at Gallagher, says: “A number of employers offer their staff free access to money fitness tools that assess employee’s financial wellbeing and make practical recommendations on how they can improve it. Educating and equipping their people is an increasing priority for many employers, as they recognise that people wellbeing leads to organisational wellbeing,” he says.

Financial education programmes

For many people, the subject of financial education can be quite dry; it should be made interesting and brought to life. Information and guidance needs to help employees cut through any confusion so that they can think clearly about money.

While standard financial education programmes with modules are useful, Watts-Lay suggests that teaching employees skills like budgeting and saving for a deposit for a first home, can also provide help in other areas of life. “This could include interactive tools, videos and animations, or even an online financial healthcheck offering support on areas such as how to manage the monthly budget and what to do if in debt,” he says.

For many, budget planning is a logical exercise, but it does not come naturally to everyone. Darren Laverty, partner at Secondsight, explains that some staff may need education on why it is important, which is where charities or dedicated organisations like MoneyHelper, Step Change and Citizens Advice come in. “MoneyHelper helps users to see graphically where their money is going each month and provides links and resources to help with this. Regarding debt management, it’s important to get the conversation going. Most employers will offer it through an employee assistance programme in the form of counselling. The most important thing for staff to have in terms of a secure financial wellbeing is an emergency fund to help them get out of debt, but not many people have these.”

Additional benefits

Another point to consider is to ensure that employees are aware and understand what benefits they are eligible for, such as workplace savings and salary sacrifice schemes, which make contributing to a pension cheaper for employees. Pollard says: “It also earns the employer cost savings through reduced national insurance contributions. Offering these employer cost savings back to employees as either additional pension contributions or contributions into other savings vehicles, where employees can save for other life events, can be useful to help employees making their savings go further.”

Voluntary benefits schemes provide access to discounted shopping vouchers and cashback deals, enabling staff to save up to 15% on groceries, DIY supplies and clothing. “In addition, [bikes-for-work] schemes enable employees to save between 25% and 39% on bikes and accessories. With the increased cost of fuel, and the health benefits of cycling, this is a money-saving benefit that more and more employees are taking advantage of,” Goss says.

Financial support or benefits need to come from an impartial perspective and need to give staff a big enough reason why they should take control of their finances, says Laverty. “It’s about empowering staff to be mindful of their money, not just chucking more and more benefits at them that might not help. Find out what employees value and also try to get value out of what [is already in place]. A good benefits package will only work if staff understand it and can place them within their own lives.”