As the aftermath of the Autumn Budget is being assessed by employers and employees, this is a very important month to be looking at employee financial literacy.

Employee financial literacy is more than just being able to add up, it is the ability to understand how money can be managed and refers to the skills and knowledge that allows employees to make informed and effective decisions about their financial resources.

Financial education has been part of the English national curriculum since 2014 for secondary school pupils. However, according to the ABRDN’s Savings Ladder Index (which gauges adult financial literacy levels in the UK), in 2024 over 23 million UK adults had poor financial literacy. The findings highlighted that poor financial literacy is hampering not just people’s long-term financial health, such as having significantly smaller pensions than those with good financial literacy, but negatively affecting their mental and physical health due to stress and anxiety about money-related matters.

Today’s financial stress

It’s not simply the size of someone’s salary either that determines their financial well-being, despite the widely held belief that higher wages make people feel more secure. A number of earlier studies have shown that it is the size of an individual’s savings pot and regular contributions to it that give people peace of mind and financial stability. Yet, recent analysis from the Money and Pensions Service (MaPS) found that a quarter of UK adults have less than £100 in savings. A new survey by financial advisers LCP, revealed more than three in five UK employees have borrowed money to meet basic needs in the last year and half of respondents admitted they lacked financial confidence.

According to the CBI, although more workplaces are now recognising that when somebody comes to work, they don’t leave their worries behind, financial wellbeing rarely forms part of workplace conversations. Yet, employees preoccupied with their financial problems are shown to be disengaged, distracted and more likely to make mistakes at work – significantly impacting on their performance and productivity.

How employers can help

However, it is NOT the role of employers to give their employees financial advice, but they can help source appropriate partners to help brief and educate their employees about budgeting, sensible borrowing, investments and financial planning. This can be through occasional sessions or longer term financial education programmes and supplemented with ongoing support through online wellbeing resources or employee assistance programmes.

Talk Money Week 4th – 8th November 2024 

The Money and Pension Service runs this annual campaign to encourage more businesses and organisations to initiate conversations about money. This is based on their research showing that people who talk about money:

  • Make better and less risky financial decisions
  • Have stronger personal relationships
  • Help their children form good lifetime money habits
  • Feel less stressed or anxious and more in control of their finances.

This year they are keeping it simple by asking organisations all over the UK to encourage their people to commit to doing just “one thing” that could help improve their financial wellbeing, such as checking in on their pension pot or accessing free budgeting tools online.

Plan ahead and make use of these online resources to help start your conversations!

Useful Links:

Tools and calculators to help with budgeting and saving: https://www.moneyhelper.org.uk/en/tools-and-calculators

Free debt advice: https://www.stepchange.org/about-us/what-we-do

Financial Wellbeing Workshops and Webinars: https://themoneycharity.org.uk/workshops-webinars/adults/adults-workplace/

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