Understanding financial wellbeing and creating a benchmark

Our financial wellbeing research found that money worries are affecting employee mental health, productivity, retention and absenteeism.

Those with money worries are:

  • 8 times more likely to be prone to anxiety and panic attacks
  • 6 times more likely to not finish daily tasks
  • 2 times more likely to be looking for another job
  • Taking 1.5 sick days a year due to financial stress

Where are the causes of this financial stress.
There are many potential sources of financial stress. Our survey found 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% of people regularly run out of money before payday and this is strongly correlated to money worries.

What was most interesting is that this was true across all salary bands: higher pay does not protect people from financial stress:

Income Regularly run out of money Worried about money
<£15,000 43% 49%
£15,000 – £25,000 38% 43%
£25,000 – £40,000 32% 37%
£40,000 – £60,000 29% 36%
>60,000 33% 38%

How can you measure financial wellbeing?
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 based on ten questions about saving, borrowing and spending habits.

We have discovered that it isn’t as simple as more money equaling a higher score, and better financial wellbeing. Almost a third of people getting higher scores earn less than £25k pa and 25% 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% of people have a score of 3. Instead, there are large spikes at 2 (31%, no freedom to enjoy) and 4 (41%, plan in place).

These two groups have very different attitudes and behaviors when it comes to money and this difference is the strongest influence over their financial wellbeing. The correlation between regularly running out of money before payday and money worries is also 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% 82%
2 71% 69%
3 10% 29%
4 10% 22%
5 0% 8%

This is quite shocking when you consider that over a third of your workforce are likely to score 1 or 2 and may be struggling with high levels of financial stress which impacts their work day.

What are the implications for your financial wellbeing strategy?
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. This can bring hugely important context to developing the strategy. Someone scoring 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. You could also explore surveying your entire workforce.

Which benefits can help those with lower financial wellbeing?
For some, providing access to pay as it is earned can be a massive benefit. Giving more control over pay frequency can help with budgeting, provide support for financial emergencies and avoid falling back on expensive debt to make it through the month:

As part of a financial wellbeing strategy that includes savings, education and affordable borrowing, more flexible access to pay can provide a foundation for improved money management and financial wellbeing.