Money doesn’t necessarily make people happy. But financial stress will certainly make people unhappy. Financial anxiety reduces wellbeing and prevents people from thriving, both in life and at work.
Sadly, it’s also a harsh reality for as many as 77% of UK employees. Research by the charity Mind highlights the strong link between money and mental health: poor mental health makes it harder for people to manage their finances effectively, but worrying about money has a negative impact on mental health.
It’s a cycle of stress that must be broken. The good news is that more employers are starting to show up and lend valuable support.
Why savings matter
First, let’s look at this from a psychological standpoint. If we think about the opposite of stress and uncertainty, what we’re really talking about is consistency, security, assurance, predictability, and clarity. These are the things that people cling to in stressful times because they sit in direct opposition to the instability that drives anxiety, reduces wellbeing, and impedes performance.
This is why empowering employees to budget and save must be a key priority for every employer. Having savings in the bank gives people more control and freedom of choice. And the psychological comfort of having a financial cushion will relieve stress in and of itself. Despite all this, some 30% of UK adults have no savings at all.
A payroll savings scheme allows employees to build a resilience fund by setting aside money automatically as they earn. Similarly to pension and other deductions, the funds are deducted before salary transfer, making it easier to save. Between 55 – 72% of employees are keen on this employer-assisted method of saving, according to data quoted by the Money & Pensions Service.
Closing the financial skills gap
In a recent qualitative study, HR leaders raised the prospect of employers doing more to plug gaps in state-run healthcare. It’s an interesting concept and one that runs along the same vein as organisations playing a more active role in employees’ financial health.
Financial stress not only harms wellbeing, but also reduces productivity and performance at work. Financial wellbeing is more widely recognised as both an employer priority and obligation. At the same time, employees are perhaps more open to talking about their finances, aided by cultural change and the cost-of-living crisis. All of this represents progress, of course.
But what more can employers do? What are the practical steps organisations can take to reduce financial stress, improve wellbeing – and by extension, empower employees to reach their full potential at work?
Make employees aware of what’s available to them
Less than half (45%) of employees who have access to financial wellbeing support are using it (CIPD). It’s a surprisingly low uptake, especially when you consider that another 45% of financially stressed employees are losing sleep because of their situation. So why aren’t more employees accessing the financial support that is available to them?
Suffice to say, the issue here is one of awareness, not appetite. Employees can only take advantage of financial wellbeing benefits if they know they exist and are available to them. And herein lies a key opportunity for HR leaders to increase their financial wellbeing communications, ensuring employees are fully aware of all the benefits and support at their disposal.
On a practical level, this calls for regular financial wellbeing workshops and webinars, as well as internal communications that direct employees to valuable (and trusted) third-party resources such as Moneyhelper – the government-backed website that provides free and impartial financial support.
Leverage tech to improve financial literacy
AI also has an important role to play here.
By leveraging AI-enabled payroll technology, employers can help people to better understand their pay and benefits so that they know exactly what to expect in their pay packet. Intelligent payslips, underpinned by chat interface technology, are now enabling employees to access digital explainer content for every element of their payslip, including student loan repayments, tax codes, pension and National Insurance contributions, and net versus gross pay.
This instant access to knowledge provides clarity and assurance – the all-important things that, as humans, we need to feel financially (and psychologically) safe. And given that eight out of ten UK employees do not fully understand their payslip, a big part of the solution lies in reducing the pay-related uncertainty that fuels financial stress.
What this ultimately boils down to is the control factor. Employees may not be able to control their rising expenses and household bills, but they can, with the support of their employer, regain some control by improving their financial literacy to make more informed decisions that support their financial wellbeing.
Provide psychological and – practical – support
While only 20% of UK employers have a financial wellbeing policy or benefits package in place, those that do are seeing greater employee satisfaction. In those companies with a policy, 60% of workers say their employer is doing enough to support their financial wellbeing, while only 28% of those working for an employer without one say the same. Financial wellbeing clearly provides employees with a psychological boost, whether they use it or not.
For the employee in immediate financial distress, however, it’s vital that the employer provides both psychological and practical support. This is where earned wage access (also referred to as flexible pay) can offer a financial lifeline by enabling employees to draw down a percentage of their earnings before pay day, helping them to avoid high-interest rate loans and credit card debt. More than one in ten UK employers now offers some form of Earned Wage Access. This figure is expected to grow quickly throughout 2025 and beyond.
By acting on these three simple steps, employers will not only fulfil their obligation to the employee but improve financial wellbeing across the board, leading to increased engagement and productivity at scale. The case for bridging the financial wellbeing gap is no longer in question. What remains to be seen now is which organisations will embrace this opportunity to drive tangible people and business performance.
David leads product strategy and development within Zellis' Fintech domain and thrives on finding solutions to address user needs. David's expertise stems from leading product, innovation, and marketing areas at diverse organisations including Admiral, RAC, and Warburtons.