Financial education is now a necessity

Financial education has become a significant part of the wellbeing offering, as the UK sees a surge in the cost of living.

Research by HR consultancy Gartner has revealed six in 10 (60%) companies now offer financial education classes to their employees.

According to experts, companies are increasingly seeing financial education as a fundamental provision for employee health and safety, instead of a 'nice to have'.

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The start of 2022 saw inflation surge to its highest point in 30 years, with costs rising 5.4% over the past 12 months.

Similarly, it is expected that rising fuel costs, alongside an increase in National Insurance contributions, will push the cost of living even higher. 

According to Jeanette Makings, head of financial education services at banking group Close Brothers, financial education isn't just a luxury for larger businesses.

She told HR magazine: "Companies of all sizes provide it. It's more about their priorities and culture as an organisation, and the value they place on financial wellbeing as part of their overall wellbeing provision."

She added that inflation will hit those on lower wages hardest, but financial education may help some avoid sinking into debt.

She said: “It’s going to disproportionately affect those whose budgets are very, very tight.”

Provision of solid financial education, she added, can provide a lifeline to employees who might not otherwise have the necessary understanding of how to plan for tight times. 

“The best forms of financial education are really about enabling employees to properly understand what’s in their control, what opportunities lie ahead, and how to evaluate those opportunities for their own circumstances and financial goals.”

An important part of financial education, she added, is that employees gain the confidence to know what they are capable of doing themselves, and when to seek help.

“If someone is in financial difficulties, every day they leave it makes the difficulty worse. 

“People often talk about getting help and getting it immediately, but if you don’t, then debt, interest and unpaid bills, all get worse as each day passes.”

Carolina Valencia, VP at Gartner HR, told HR magazine that businesses are becoming more aware of how employee wellbeing – financial wellbeing included – directly affects productivity and performance.

She said: “One in four companies have introduced a new financial wellbeing offer since the COVID-19 pandemic. 

“They recognised that personal finance was one of the biggest worries for employees during this time and took steps to start to address it.”

According to Close Brothers statistics from June 2020, less than half of UK adults (44%) had felt financially prepared for the pandemic. 

Valencia recommended HR leaders look towards pulse surveys and regular manager discussions in order to keep abreast of employees’ needs.

She said: “Our research is finding that it’s less about what you offer employees, and more about how it makes them feel. 

“Organisations that truly understand which offerings make employees feel cared for at a particular moment in time will create a competitive advantage – this is increasingly important given the current war for talent.”