Supporting your people to manage post-Christmas debt

According to debt charity StepChange, money borrowed to finance Christmas could take years to repay. Worries about debt led to a surge in enquiries to the charity as soon as the festive season was over – they advised more people on 3 January 2023 than on any day in 2022.

Similarly, a recent Savanta Comres poll conducted for the BBC suggested that a third of respondents were not confident about their ability to repay Christmas-related debt.

It’s not surprising that people are turning more to credit, with the same survey indicating that 8 out of 10 people felt worried about the rising cost of living, with some inevitably also reporting that they are losing sleep about it.

 

Should your people’s financial resilience concern you? The answer is yes!

There is a significant amount of research showing that employees with poor financial situations do not perform as well as employees in stable financial situations. The link between a poor financial situation and job performance is the level of stress that money worries cause. Employees experiencing high levels of stress are less productive, as they are more focused on, and distracted by, their financial problems.

Supporting employee’s financial health is therefore as important as looking after their physical and mental health, as they are intrinsically linked.

Helping employees stay financially healthy, and enabling them to work without the stress of worrying about money, is an essential part of keeping your organisation productive and efficient.

 

How to ensure people get the support they need – without them having to ask

Given that it is unlikely that employees will volunteer the fact that they are experiencing difficulties, a solution is to provide a good level of support in the background. Here are some suggestions:

• Deliver some financial education refreshers on how to budget properly and sensibly manage credit. This can be delivered cost-effectively either by seminar, webinar or digitally
• Provide an outlet if things are getting out of control - employee assistance programmes can support financial wellbeing with debt and budget management tools and resources, as well as helping with the mental and emotional impact of debt and money worries
• Consider practical benefits which can save employees money:

• Access to retail discounts, which helps increase the buying power of salary
• Setting up a cash plan where an employee can recoup costs for routine healthcare items, which otherwise have to be paid for from their own pocket
• Providing group risk benefits, which provide financial protection for the employee and their families as well as ensuring that there is support if the worst happens
• Appointing an organisation which takes over employee debt, reducing the interest rate and taking payments directly from the employer. The lower interest rates enable the debt to be repaid faster.

The pandemic rightly put employee wellbeing into unprecedented, sharp focus. Financial wellbeing is a key element and, in these difficult economic times, your people need your support more than ever.