Thu. Jul 25th, 2024

Financial worries are once again the top concern of UK employees, with three in five individuals feeling the strain this year. What’s more, they’re worrying about their later life and retirement too – this is their second biggest concern. Those impacted are not just lower-paid, as people with the highest salaries are worrying too. Just over half (52% vs 50% last year) of those researched have to borrow money to meet basic financial needs, according to Neyber’s third annual DNA of Financial Wellbeing report, which this year looked into money behaviours and attitudes of over 11,000 employees and 720 employers.

Not surprisingly, financial worries are taking a toll on people. One in three employees have felt stressed, one in three have felt anxious, one in four have lost sleep and one in five have felt depressed.

Monica Kalia, Chief Strategy Officer and Co-Founder of Neyber, said:

“Across the UK, an estimated 20.3 million workers are affected by money worries. And these worries are not just confined to the young or lower paid in the workforce. Although money worries do decrease with income, almost half (46%) of employees earning over £70,000 per year are stressed or anxious too. Conversely, 70% of employees earning £10-£19k are impacted, the highest of the earning groups.”

Money worries are not just a low-income problem; this graph shows people in each income group who say they are affected by money worries.

A large proportion of employees are struggling just to get by from payday to payday, according to the report – and they’re relying on debt to make ends meet. Twenty-seven per cent use credit cards to get by, building on the issue regularly. Just 2% borrow from their employer, perhaps through a loan or payroll lending.

On top of this, many employees can’t save because they don’t have the spare income. This can cause issues if something unexpected happens and can lead to more debt. Of those with no savings, 80% have debt to repay.

Neyber’s report also shows that:

  • For those who have debt, the average amount is £7555, around a third of their annual salary.
  • 36% say they sometimes or often struggle to pay off credit cards.
  • 45% run out of money between pay cheques.
  • One in three people have £1000 or less in savings.
  • One in four people don’t save regularly and of those that do, the most common amount saved is less than £50 each month.
  • One in four people would be able to cover their regular expenses for less than a month if they lost their income.

Later life is a big worry too

The DNA of Financial Wellbeing shows that employees aren’t just worrying about today. Later life/retirement plans have risen in importance from third to second place in the biggest financial worries of employees, taking over from physical health which was last year’s second biggest concern. Just one in three employees believe they can look forward to a good lifestyle in retirement and nearly a third (29%) aren’t aiming to save for retirement.

Five financial wellbeing stages – we all fit into one of these groups

To understand employee perspectives, Neyber has developed five financial wellbeing stages for every individual, regardless of age, income or gender. Almost half of British workers are in groups one to three. The groups are:

  1. Getting started – where employees tend to run out of money before pay day.
  2. Taking control – where employees may need to borrow, and struggle to pay off credit cards.
  3. Finding balance – employees aren’t borrowing to meet financial commitments, but they are still paying off credit cards and don’t have enough of an emergency savings buffer
  4. Building resilience – employees are in control of debt they have and feel they have enough for things they enjoy; they have an emergency fund to cover at least three months’ wages.
  5. Planning ahead – employees are financially comfortable, with savings and retirement plans in place. They may be investing and can spend money without causing a financial strain.

Kalia summed up:

“Providing support that is relevant to the differing needs of employees is an important part of an employer’s support. Financial wellbeing is not just about paying off debt, but about ensuring employees feel in control and confident about their future as well.”

Employee perspective: Karen on paying down her debt

“Money to save has never been there, it’s always been very tight. I’ve always had low salaries but one thing I’ve always wanted to do is look after the children, make sure they have a roof over their head and food to eat. So, for everything else I had to spend using credit cards. It even got to the point where we had to take out a number of payday loans to cover things and it started to spiral. When we had a baby unexpectedly it made things even tighter. We’d never been able to get a loan or credit but through work I was helped by Neyber and it was a breath of fresh air. The fact that the money went out by salary deduction meant I didn’t have to do anything or think about the loan. It’s such a different way of doing things. It was gone before I’d even got my pay packet and that was amazing. The first thing we did was close all the high rate credit cards. We even have a bit of money left over to buy some camping gear to have our first holiday in several years. Now each month it’s not a fight to get to the end of the month.”

By Editor