By Judith Lamb, CHRO at CloudPay
Historically, employee benefits might have taken the form of gym memberships and healthcare plans. But, over the past two decades, employers have started offering a much wider range of perks than ever before in order to recruit and retain the talent they need, from flexible working hours through to four-day working weeks. While these perks are appreciated and can contribute to a better work / life balance, the cost-of-living crisis – combined with wider macroeconomic challenges – has led to the emergence of a new type of benefit; financial education. But why is this now being treated as a valuable perk to offer your workforce, and what impact can it have on staff?
It’s no secret that, even for the most financially comfortable, the year has been exceptionally challenging, with people battling against rising food and fuel costs coupled with inflationary pressures and wage stagnation that have stretched pay packets to their limit and forced many to adjust their lifestyles in order to make their income go further.
According to data from the Office of National Statistics, the Consumer Prices Index (CPI) – the annual inflation rate for housing, water, electricity, gas and other fuels – peaked in January 2023 at a staggering 26.7%. On top of this, supermarkets and almost every food outlet have increased their prices which has meant that people are now having to do more with less.
However, part of this issue is the fact that despite many highlighting its importance, education on day-to-day financial management simply isn’t provided at a detailed enough level within the wider curriculum in the UK, and most people are left to independently learn about the financial system.
This is where employers can help, though. By bringing in financial education as an employee benefit, firms are essentially enabling their workforces to utilise their income more effectively and to leverage their earnings to the maximum degree.
Offering this type of perk empowers employees to make more of their income and educates them about how they can better use their available budgets to avoid landing in financial difficulties. It is also particularly useful for longer-term financial planning, like pension management – an area that few people have a thorough understanding of, particularly at the earlier stages of their careers. This isn’t just a benefit for the here and now, it can also provide value in the long term and lead to broader levels of improved decision-making.
According to a leading Wealth Management firm, there are also significant health benefits to providing financial education. It doesn’t only give employees a better understanding of how much money they have, how they can spend it and the hidden costs involved with the likes of house purchases, loans or leases, it also supports a broader level of wellbeing and can help professional users to feel better supported by their employer. And the benefits work both ways. Employers who offer workplace-based financial education typically have a more motivated, productive and less stressed workforce. It can also contribute to improved retention and productivity rates and lead to a reduction in the number of days employees take off for stress-related issues.
For businesses, as well as reduced absence rates and improved levels of employee wellbeing, offering financial education can also improve output at a more holistic level. After all, what company wouldn’t want to have a workforce comprised of financially educated professionals? Better financial knowledge can lead to improved decision-making, the ability to spot areas where costs could be cut, and more broadly enable a firm to be more financially prudent.
While there is still a role for ‘softer’ employee perks like gym memberships, free coffee and more, by offering something tangible such as direct financial education to your workforce, you’re providing a truly valuable and long-term benefit that will aid them throughout their life. This education enables a more holistic approach to supporting employee wellbeing, with prudent financial management providing a solid foundation.
Our offer delivered via our accessible CloudPay NOW app provides clear information about where professionals earned wages are going, their level of take-home pay and improved accessibility related to how and when they can access it. It also offers 1:1 financial coaching, via our partnership with Claro Wellbeing.
Financial education is going to be a key benefit offered by future-proof businesses, and for the financial and payroll sectors, I’d say that’s an exciting step towards more modern and innovative pay solutions.