Mental health, financial wellbeing and the last taboo

In 2014, Barclays published a research paper entitled ‘Financial wellbeing: the last taboo in the workplace’. The report called for employers to tackle the taboo of talking about finances in the workplace and urged them to consider how they can help their staff develop their financially literacy skills and become better equipped to manage their personal finances. Of the many uncomfortable findings, the one where only 10% of the 2100 employees surveyed believed that their employer cared about their financial wellbeing is particularly troubling. The survey also identified that 11% of respondents had no savings and regularly spent more than they earned.

At the end of 2019 the Howden Employee Benefits & Wellbeing Survey reported that 96% of Employers believed that some of their workers were experiencing persistent money worries, yet 40% of the same Employers had no formal procedures in place to support workers with financial problems. In the same year the Money & Pensions Service reported that 32% of the UK’s workers have less than £500 in savings. In other words, 1/3rd of the working population is one unexpected expense or shock away from going into debt.

While we have yet to see the full effect of the pandemic on the finances of UK employees, it’s clear that a lot of people will be worse off and the most vulnerable will be significantly worse off. The findings of Financial Inclusion Alliance starkly illustrate the link between financial health, mental health and employee performance:

  • Employees living with constant money worries are 5 times more likely to have troubled relationships with colleagues at work.
  • Employees with money worries are 6 times more likely to produce substandard quality work than their colleagues.
  • Employees with money worries are 7 times more likely to have lower productivity or not finish their daily tasks than their colleagues.
  • People who are experiencing money worries are 8 times more likely to be experiencing sleepless nights that are impacting their state of mind at work and cognitive capacity
  • Fifty per cent of all work absences are caused at least in part by financial distress

Before we look at ways to tackle these issues, it’s worth examining some of the reasons why financial fragility is such an issue. Why is financial wellbeing not at the heart of every employer wellbeing strategy? After all, many employers have made significant progress in supporting the physical and mental health needs of their employees. At its heart is this very uneasy relationship we have with money, both individually and as a society. Over 100 years ago Sigmund Freud referred to talking about money as the last taboo. And we haven’t changed much. Money talk is everywhere but we don’t talk about our relationship with money – how we feel about it, how it makes us feel. Most people have never been shown how to manage their finances – instead we go through life with a set of beliefs and patterns that we inherited during childhood from our immediate caregivers and the broader cultural environment. Failure to manage our finances is seen as shameful – yet, without guidance or a great deal of luck, most of us will struggle at some point.

And it’s not just a question of financial literacy. For many years the debate around financial education has been framed as a numerical exercise; people simply need to understand the principles of budgeting and saving. And while these principles are important, our relationship with money is emotional, not transactional. Money gets us the things that meet our core security needs and make us feel good. Money is society’s proxy for self-worth and we are bombarded by messages from the media and marketers that buying things will make us happy, attractive, successful and rich. There is almost no messaging around the positive aspects of living within your means, educating yourself financially and focusing on intrinsic ways to achieve wellbeing.  Saving is almost always seen in the context of saving money on a purchase, not for a purchase. Our society has no role models of people that practice positive financial behaviours. Instead we are told that ‘we can have it now and pay when we like’.

So what role do employers have over and above the provision of a living wage and health and pension benefits? All organisations should provide financial wellbeing education for all employees, particularly new entrants to the workforce. This education should give employees the tools for understanding how to make decisions that support their long-term wellbeing, not just information on the company pension scheme. This includes giving people an understanding of how they make decisions about money as well guidance on how to take control of their financial outcomes. Showing an individual how they can save and invest is far more impactful than telling them that they need to save more. Over a 40 year timeframe, the difference in financial outcomes between somebody who has managed to invest £100 per month in an investment ISA and somebody who has spent the same amount servicing credit card debt is life changing.  And it’s not just about education. Giving employees flexibility so they can minimise childcare costs, especially during school holidays, can make a massive difference to stretched family finances. Financial wellbeing sits at the heart of employee wellbeing, and it starts by building an environment where people can feel supported, not judged, around their financial issues. It’s time to break the last taboo.

Written by Dennis Harhalakis

Dennis Harhalakis is a Certified Money Coach and founder of Cambridge Money Coaching. With over 30 years of financial planning experience in financial services, he set up Cambridge Money Coaching to help people understand and manage the money in their lives.

We are pleased to be working with Dennis Harhalakis on our forthcoming FREE webinar on Friday, 14th May 2021 – ‘Employee Financial Wellbeing – Why You Should Care, register to attend here

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