Financial wellbeing: Are employers providing the right tools?

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The latest Wagestream research shows that one in two employees would 'think more favourably' of their employer if they offered financial wellbeing support, and would be more likely to stay with them for the long term

WITH INFLATION at its highest level in almost two decades, Australians are feeling the financial pressure. The cost of food, fuel, energy and housing is increasing day by day, and research shows that around 40% of employees are currently struggling to pay bills and meet their commitments. While employers have focused heavily on mental and physical wellbeing throughout the COVID-19 pandemic, new research suggests they may need to rethink their strategies around another vital area – financial wellbeing. Charity-backed fintech Wagestream has published its Australian State of Employee Financial Wellbeing report, in which it analyses how employees are coping with the cost of living crisis, as well as what organisations are doing about it and how they can build more effective support programs.

Wagestream is the financial wellbeing app founded by charities, designed for workers and built around pay to make managing money simple. Offered through leading employers like Hungry Jack’s, The Just Group, BPAY, Pizza Hut, Accor and Southern Cross Care Queensland, Wagestream gives employees tools like real-time pay tracking; the ability to grow savings directly from pay; live chat money coaching; and instant access to earned wages. Wagestream is driven by a social charter: every service it provides must measurably improve financial wellbeing. Over 70 per cent of people using Wagestream feel more in control of their money, leading to a happier, healthier, more productive workforce.

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“Despite a majority of HR professionals knowing employees need more help in this regard, the data shows that only a tiny minority are planning or able to roll out a financial wellbeing program in the next year”

Josh Vernon, Wagestream

Its findings are stark: almost 30% of Australian employees don’t have enough money to cover food and regular expenses, and less than 50% are able to save regularly. However, three-quarters want to learn more about managing money effectively, and a large majority (58%) want their employer to do more to support their financial wellbeing. More concerningly, the research revealed a huge disconnect between how employers and employees see things. While 58% of employers felt they offered financial wellbeing support, only 36% of employees agreed. According to Wagestream, the research shows that financial wellbeing is a core component of overall wellness, and employers have the potential to make “a huge difference” in this space. “Our State of Financial Wellbeing report reveals that employers in Australia are not taking advantage of the huge opportunity to boost their employees’ financial wellbeing through a range of readily available resources and tools,” says Wagestream Australia CEO Josh Vernon. “But despite a majority of HR professionals knowing employees need more help in this regard, the data shows that only a tiny minority are planning or able to roll out a financial wellbeing program in the next year.”

Financial wellbeing: the overall picture As part of its research, Wagestream surveyed over 1,000 employees across Australia. They were asked about budgeting and bills, savings and debt, financial education, and employer trust levels and expectations. The research also analysed data from Roy Morgan that tracks the overall financial position and feelings of employees across Australia. The results show that lower-income groups report the highest levels of financial stress. Women are at a disadvantage; they earn lower salaries on average than men and are less likely to have access to $500 in an emergency. Women are also less likely to self-report that their employer offers financial wellbeing support tools (32%, compared to 41% reported by men).

When it comes to age, it appears younger people would benefit significantly from financial education, and budgeting and savings support. Young employees (18–24 years) are more likely to earn less, have less in savings than older demographics, and are more likely to miss bill payments. According to Wagestream, the first step towards improving financial wellbeing is understanding the general state of employee finances across Australia. Once employers have a good grasp of the key areas of stress, they can develop a strong support and education program targeting the areas of greatest need. “The behaviours that contribute to financial wellbeing are simple everyday money habits that can be built over time,” the report states. “These include managing day-to-day spending and meeting expenses, budgeting, debt management, and building financial resilience.” The report notes that budgeting is a particularly core component of financial wellbeing. However, while 79% of survey respondents said they had a budget, 50% found it difficult to stick to it. With the cost of living crisis in full swing, the report notes that budgeting support will become one of the most vital tools an employer can offer. Other key areas of improvement include managing debt, saving regularly and accessing financial education. But with only 6% of employers planning to run a financial wellbeing program within the next 12 months, the gap between employee needs and employer provisions looks quite significant.

Taking action as an employer If there’s one theme that comes through very clearly in the report, it’s that employees have a strong desire for more financial wellbeing help from their employers. For an employer, the benefits of providing this are huge. One in two employees said they would “think more favourably” of their employer if they offered financial wellbeing support, and almost one in two would be more likely to stay with their employer. Given the current focus on talent acquisition and retention, financial wellbeing is an important factor to consider. However, in its survey of employers, Wagestream found that only 33% currently had a formal financial wellbeing strategy in place, and 58% of HR professionals thought employees would like them to do more.

“If every employee in Australia was experiencing financial wellbeing right now, we would have a significantly happier and healthier, and far more engaged and productive labour force”

Josh Vernon, Wagestream

So, what specific kinds of tools are employees interested in? According to Wagestream, employees are keen to have access to technology-driven budgeting and saving tools. Eighty-three per cent of employees said they were interested in a platform that would allow them to earn more interest by automating savings directly from their earnings, and eight in 10 employees were interested in tools that would allow them to separate money for bills at payday. Younger employees (aged 18–24) were particularly keen to have help with controlling and managing their debts. Meanwhile, seven in 10 employees wanted their employer to separate their savings and pay them directly into a different account.

Finally, financial literacy and education are still important: 76% of employees are interested in short, interactive app-based money management courses, and 73% would think more favourably of their employer if they offered engaging financial education. When it comes to improving financial wellbeing, Wagestream says the vast majority of employees are open to learning and have a strong desire to improve their skills. With the cost of living crisis likely to persist for some time yet, now is a prime time for employers to start seriously investing in this area of wellbeing. “Employers who take the financial wellbeing of their staff seriously see great reward,” Vernon says. “The current tight employment market makes this even more critical given employers are competing heavily to attract, recruit and retain high-quality staff. “Financial wellbeing occurs when an individual can meet their current commitments and needs comfortably and has the financial resilience to maintain this in the future,” he concludes.

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Current financial situation of Australian employees

Almost 30% don’t have enough money for food and regular expenses

Less than 50% are able to save regularly

40% struggle to meet bills and commitments from time to time

Source: Wagestream Australian State of Employee Financial Wellbeing report

Main reasons financial wellbeing programs are implemented: to improve mental health (62%) and overall employee wellbeing (55%)

58% of HR professionals think employees would like them to do more

33% of organisations have a formal financial wellbeing strategy

HR programs and perspective

“If every employee in Australia was experiencing financial wellbeing right now, we would have a significantly happier and healthier, and far more engaged and productive labour force.” To access the full Australian State of Employee Financial Wellbeing report, click here.