What is financial wellbeing?
We’ve all heard of mental wellbeing, and physical wellbeing, but what about financial wellbeing?
Financial wellbeing is probably the newest and most unspoken about pillar of wellbeing and with the ongoing cost of living crisis, more people are growing increasingly concerned about money. Poor financial wellbeing can have a direct impact on your overall health and wellbeing and is a huge contributor to stress however often, it is caused by factors outside of our control.
Money is still quite a taboo topic, not many people feel comfortable discussing their finances so encouraging more open communication without feeling pressure to disclose specific details and sharing resources can go a long way.
Financial wellbeing can be quite difficult to define, but essentially it is all about how an individual feels about their financial situation. Contrary to popular belief, high earners can still have poor financial wellbeing and just because people have a generous salary doesn’t mean they are in control of their finances.
There are some specific indicators of good financial wellbeing:
- You have low or no debt, and the debt you do have is manageable.
- You have a comfortable amount of disposable income and are able to support your current lifestyle.
- You don’t experience high levels of stress due to your current or future finances.
- You have sufficient savings to cover any emergencies or unexpected costs.
- You have enough money for future aspirations and options.
Why financial wellbeing is important
Financial wellbeing can affect individuals, communities, businesses, and the economy. Financial stress can have severe consequences, such as worsening mental health, therefore having a financially healthy nation is important.
People who are financially healthy and stable are more productive at work, financial stresses can cause employees to lose concentration and spend time worrying and not working to their full capacity. Good financial wellbeing and remaining productive is therefore beneficial for both the individual as well as the employer.
Businesses also benefit from having a financially healthy population. People are more likely to spend sustainably if they have good financial wellbeing, businesses will have a healthier cash flow and profits. This also applies to the economy, if people have enough money and invest, it can boost parts of the economy.
How employers can offer support
The workplace can be a huge point of support for employees who are struggling, and this is no different when it comes to financial wellbeing. Employers can commit to paying the national living wage or increase pay, but if that is not possible, there are still ways that employees can be supported.
Flexible working has been mostly seen as a way to increase work life balance, however it is also a way to save on costs. Commuting to work can be expensive and having the flexibility to work from home allows employees to save on travel costs. Allowing employees to work from home can offer some financial relief for those who need to cut back on spending.
Offering consultations with financial advisors or informing employees of local resources and services such as www.moneyandpensionsservice.org.uk can go a long way for employees who don’t feel comfortable discussing financial matters at work.
Implementing other support measures such as financial education on borrowing, saving, and budgeting, financial apps that help track and monitor spending, insurance policies, or planning services can all offer support to employees and lessen the stress of financial worries. Their effectiveness will depend on the needs of your workforce but gauging a general idea of what will help your employees most is a good first step.
Money issues can be surrounded by stigma and shame, making employees reluctant to ask for support. Employers can encourage their workforce to seek support early and create a culture where employees will feel comfortable asking for help.