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Helping employees stick with sound financial resolutions
When it comes to the most popular New Year resolutions, it is unlikely you will see much change at the top of the list from year to year. Every January, there are familiar commitments to be more active, watch what we eat and generally adopt a healthier lifestyle.
But in 2023, other priorities have made their way up the leaderboard, with many placing greater importance on addressing the health of their finances this year in the face of an ongoing cost-of-living crisis.
In this article we look at how a shifting economic landscape in 2022 has impacted on the financial ambitions and behaviours of employees as they head into 2023, and we consider the ways in which employers can deliver support.
Awareness of the importance of saving for later life might be growing, and greater numbers of people might have savings structures in place thanks to auto-enrolment, but scratch beneath the surface and a more concerning picture emerges.
Research from the Pensions Management Institute indicates that the ongoing strain of meeting higher living costs is eroding levels of pension saving. Over the past 12 months, 13% of people have reduced their contributions and a further 20% are thinking about taking similar action in the coming months. Worryingly, 7% of respondents to the PMI survey said they had stopped making contributions already.
While employers cannot make decisions on behalf of employees, they can continue to communicate the importance of pension saving, treading a line between underlining the long-term benefits of contributing to a pension and acknowledging the ongoing short-term pressure on household budgets.
Many people planned to have a more frugal Christmas this year, with 60% of adults saying they would be reducing spend on presents and eating out. However, even with a closer eye on expenditure, there’s no escaping the fact that the festive season can be costly.
For more than one in five people (22%), their spend on Christmas (which is estimated to average out at £642) will leave them needing to service a higher level of debt. This figure rises to more than a third (37%) for those who are already struggling with pre-existing financial commitments.
Faced with rising day-to-day costs and the potential of additional post-Christmas debt, it can be helpful to equip staff with the means to address money worries. Beyond pay and bonuses, this could include salary sacrifice schemes to help cover costs for childcare, loans for season tickets on public transport, and the availability of subsidised food and drink.
Help could also include the provision of financial well-being sessions to help with budgeting, or signposting to official advisory services, such as the government-backed MoneyHelper website.
While help targeted at financial matters can be invaluable, it’s also important to acknowledge that the impact of the cost-of-living crisis is also being felt in other ways. For many, New Year’s resolutions to take more control over financial matters are rooted not just in economics but in an ambition to alleviate – or to avoid exacerbating – levels of stress and anxiety.
Indeed, in one leaderboard of New Year’s resolutions for 2023, the goal of sorting out finances and cutting back spending was chosen by 27% of respondents, which was only marginally above the aim of taking better care of their mental health, which was chosen by 25%. Figures from the Health and Safety Executive (HSE) in 2021/22 show that an estimated 17 million days were lost to mental health issues, making it the number one reason for work-related illness in the UK.
Employers can help address this issue directly within the workplace, ensuring it provides a comfortable and inclusive environment for all members of the workforce. However, in today’s world of hybrid working, employees are also seeking greater flexibility in their working arrangements, with 18% of people citing this as a resolution for 2023. By accommodating this demand, employers can help ease personal pressures by, for example, helping people save money on travel or allowing them to fulfil family needs on their own terms rather than using costly third-party care services.
At a more fundamental level, employers can simply provide a space for employees to talk about money concerns. From pension savings to personal finances, there are various burdens that workers are carrying in the cost-of-living crisis, and pledging to make your company a place where people feel listened to and supported is a New Year resolution with benefits that will continue to be felt long into the future.
The information contained within this communication does not constitute financial advice and is provided for general information purposes only. No warranty, whether express or implied is given in relation to such information. Vintage Corporate or any of its associated representatives shall not be liable for any technical, editorial, typographical or other errors or omissions within the content of this communication.
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