Breaking the Final Taboo
Top tips to engage your team in money conversations!
We’ve shared 7 ways you can help start more money conversations with your team and empower them to feel better about money.
We’ve shared 7 ways you can help start more money conversations with your team and empower them to feel better about money.
The brief history of financial wellbeing goes from financial benefits, to financial education, to 1-to-1 guidance (the ‘third wave’).
For us, staying in the first wave isn’t an option. The ‘third wave’ needs to be the reality today. That’s because:
⭐️ It’s the only model that is bespoke and flexible enough to help everyone, no matter their situation or money goals.
⭐️ It’s the only model that gives you a toolkit to navigate rising costs of living for you, your people and your business.
⭐️ In all walks of life and business, 1-to-1 coaching is the most impactful way to drive behavioural change, whether that’s career progression, fitness or mental health.
The idea that employees might want to sacrifice a portion of their salary at a time when cost of living pressures are rising might seem counterintuitive.
But there are tax and National Insurance benefits which can actually mean employees’ take home pay increases. This is because by giving up a portion of your pre-tax earnings each month (to receive the non-cash benefit from your employer) you are reducing your salary. And therefore, because your income is lower, the amount of tax and national insurance that you pay on it is lower too.
So, these arrangements can in fact be an empowering move that helps employees access spending advantages or luxury items which they might otherwise have to give up. For example, the ability to lease a new electric car, buy a new bike, or afford 1:1 financial coaching.
Here’s three ways salary sacrifice can empower your teams to feel good about money.
Ninety-four per cent of employees worry about money. Financial coaching helps bridge the gap in affordability of financial advice and make it accessible for all. So while cost of living increases are top of mind, why not give them access to high quality, accredited financial advice?
Financial planning is all about saving for the future while enjoying yourself now. Via our salary sacrifice arrangements an employee pays £14-17 per month and receives quarterly coaching sessions, a custom, interactive financial plan, a personal digital action tracker and help finding the right specialists for their financial needs. We also estimate that the average household can be over £9000 better off after 12 months of coaching.
It’s important to be clear that the value of a salary sacrifice will be very bespoke and depend on someone’s individual circumstances. Having a financial coach can be a great way to help them understand the impacts for them.
When the now is in crisis we forget about the future. It’s a balancing act. Pension matching is one of the best perks you can get – effectively free cash from your employer, which gets more free cash on top (courtesy of tax relief). But it’s also probably one of the most overlooked benefits among workers. Partly because it’s indirect (i.e. not cash in hand) and partly because it’s related to a future version of ourselves who’s not struggling with present cost of living challenges.
Shah Abassi, head of financial coaching at Octopus MoneyCoach says: “One of my favourite things as a financial coach is getting that “aha” moment when people finally understand how a pension is tax efficient. The majority of people I speak to don’t always fully understand their workplace pension arrangements until I explain it. With cost of living increases putting pressure on day-to-day budgets there’s a worry that people will stop contributing into their pensions not realising what they’re losing out on!”
It’s often the case that making more sustainable choices comes with a higher price tag. So as costs of living increase, greener choices might become less accessible.
Salary sacrifice can give your employees the opportunity to keep spending in line with their values and having a positive impact on the planet. For example, a salary sacrifice arrangement with Octopus Electric Vehicles can save an employee up to 40% on a brand new electric car (in addition to the income tax and national insurance savings). So, salary sacrifice enables employers to support their employees to make better choices in a more affordable way.
Our coaches recommend avoiding overly restrictive approaches to budgeting. It’s important to focus on giving ourselves space in our budget for small luxuries and treats and stuff we enjoy, so we’re not solely focused on what we have to cut. This is especially true at the moment larger life goals might be put on hold because of the impact of inflation or rising interest rates.
Just offering benefits through salary sacrifice isn’t necessarily enough to make sure your employees are taking advantage of them. Not all benefits will make sense for all employees. And that it’s important to ensure you’re providing someone they can talk to about their individual circumstances, whoever that might be.
But it’s important to make sure you’re communicating regularly about what’s available and educating your employees on the positive impacts salary sacrifice arrangement could have for them.
We asked our coaches for their best quick and easy ways to check you’re not overspending or overpaying for day-to-day essentials.
Download the guide and see how many you could implement today!
Octopus MoneyCoach’s most recent research identified that employers think they need to do much more to improve employee financial health.
They want to do better and are ready to enter this new and more powerful phase of financial wellbeing. But old habits may die hard.
Experts from Octopus MoneyCoach, Brewin Dolphin and MAD Media share views on ways to engage leadership, set ambitious targets and build financial wellbeing champions in your business.
As costs of living continue to rise, HR leaders are telling us they need to do more to improve their employees’ financial health – and quickly.
Hear insights from Octopus MoneyCoach and Serco about how to overcome financial inertia, get teams inspired by money conversations and build a strong financial wellbeing business case that aligns with broader business goals and values.
While it’s undoubtedly important for your employees to understand the significance of inflation and interest-rate increases, focusing too much on the negative creates a sense of inertia, and risks employees switching off because it all seems too hard.
But putting their heads in the sand and avoiding taking action is one of the worst things employees can do. So, employers have an important role to play to help their teams feel empowered, not disengaged in the face of cost of living increases. And it starts with how you communicate and frame the situation or help available.
Almost all employers will be thinking about what they can do to educate and support their employees as costs rise. Given the quantity of headlines focused on cost of living impacts there is a risk that people are getting over-saturated and disconnected. Getting the tone of communications right is key – make it understandable, relevant and accessible for all your employees.
It’s also important to make sure your language is as inclusive as possible. So it’s clear to ALL your employees that support is available. “Sometimes people think financial wellbeing programmes are only for people with lots of money. They think talking about money is only for the rich!” says Shah Abbasi, Head of Coaching, Octopus Money Coach.
When you’re engaging your own employees around financial wellbeing – through your communications, surveys, or events – always lead with questions about their hopes and goals. People will feel more inspired to act when messages are positive and connected to their life goals.
Just because the current focus is on the present day changes to cost of living, that doesn’t mean people can afford to stop thinking about their longer term financial health.
At Smart Pension, Amanda Hall, head of customer engagement and financial wellbeing says:
We try to help people remember this balance by talking about 3 Future P’s – People, Planet, Profit on balance with the 3 present day C’s, which are Covid, Cost of Living and Chaos caused by political uncertainty. We want to change the narrative to focus on empowering communities, employers and members to make small micro actions. Over time these actions can make a big difference to their sense of wellbeing, financial futures and avoiding the hopelessness, and helplessness, instilled by the news headlines covering the ‘3 Cs’.
Offering regular sessions on general topics, or tailored sessions on specific products to help make finances a part of everyday working life and a ‘normal’ topic to engage with at work continues to be important. “Persistence is key” Michaela O’Neill, Head of Reward and HR Analytics at global market research business Ipsos told us in a recent webinar.
But to avoid employees ‘switching off’ it’s important to refresh your approaches to customer engagement and find different ways to engage beyond the standard internal communications. We often see uptake rates of 60% for financial coaching (compared with 5% average benchmark for financial benefits) through our focus on multi-channel communications.
As an employer you could:
To help combat the volume of news coming out, employers can be a trusted resource to help employees filter through the headlines or challenge the way things are reported to get a truer sense of the impacts.
Amanda Hall at Smart Pension says: “We delivered a 10-day financial detox to help our colleagues review and recalibrate their finances. For each day we provided a short written guide, a video with a relatable colleague story, and links to more information. We also created a Slack channel where people shared stories of how it worked for them. It really helps to create engagement and bring money conversations to the table so teams can share challenges and successes. Our internal financial wellbeing channel is popular and our colleagues are happy to talk and share their views and ideas on personal finance.”
One of the few times people will engage with their finances is when they look at their payslip each month. Increasingly these are being delivered in an electronic format. Employers could use them to alert staff to some of the changes affecting them, opportunities available to help them with their money, or resources and guides.
Money is still a taboo subject but there really has never been a better time to start this conversation. We know from our own research that 89% of people want someone they can talk to about money who will offer genuine, practical, and impartial advice.
Having a coach helps employees translate and connect the technicalities of financial planning to their real life. Coaches are especially valuable when circumstances change (for the worse or better) because a lot of the financial advice is generic and not tailored to individual needs. When employees are able to talk openly about money worries, and their goals, they are better able to find solutions that are tailored to them. This is at the core of how our coaches provide bespoke advice to each individual’s situation.
The rate of inflation has now reached a 40-year high. And while the Bank of England is committed to bringing inflation down, it’s forecast that costs of living will remain high throughout 2023 before easing up in 2024.
Helping your teams take positive steps to build their financial health will be an important way to support them. But the cost of living crisis is going to challenge many of us to reassess our mindsets and beliefs about money and how we prepare to weather the next year of increased costs.
A mindset is the way of thinking about or framing yourself and the world around you, and it’s informed by your personal beliefs and values. For example, if you develop a mindset that says ‘I am bad with money’ you might avoid taking actions to improve your financial situation because of that belief.
Our coaches have shared some of the money mindsets they’re seeing – and what the cost of living crisis could mean for them.
This person thinks the cost of living crisis is something out of their control, so feels disconnected from the need to take action. They believe the effects of rising interest rates and inflation are the responsibility of the government or their employer to solve.
We asked our 2,600 LinkedIn followers how they felt about cost of living increases, and 42% confirmed that they felt pretty pessimistic.
How they’ll be impacted:
Someone who thrives on finding a discount and takes pride in never paying full price for anything. Knows where every penny goes month by month. They’re ready to take on the cost of living crisis with super restrictive approaches and excessive frugality.
How they’ll be impacted:
Someone who feels fairly at ease despite the headlines. Already lives within their means, is a middle or high earner and is pretty confident they have good money habits, so doesn’t feel the need to change behaviour much.
Eleven percent of people in our LinkedIn poll confirmed they were not thinking about how cost of living rises would impact them yet.
How they’ll be impacted:
An impulsive personality type who doesn’t think twice about spending on something they want. Act now, and ask questions later. May struggle to balance short-term desires with long term goals.
How they’ll be impacted:
Characterised by late night phone scrolling, consuming too much news, and constantly threat-scanning for what could go wrong. This person may struggle to sift through the headlines in order to know what advice to follow, or how to apply it to their own life.
How they’ll be impacted:
Cost of living increases are affecting everyone, regardless of salary or wealth. There’s no ‘one-size-fits-all’ when it comes to financial help – especially when there are external factors at play like inflation and rising interest rates. Everyone will feel the impact differently based on their individual circumstances, mindset, and life goals.
But there are some tried and tested money fundamentals every one of your employees should be considering to build their financial health and resilience through the current economic uncertainty.
Simple Budgeting Techniques
Sometimes it really is as simple as making sure people are aware of how to balance their income and outgoings.
Building a budget is the first place all of us should start. Most people will have access to simple tools to help them review their outgoings more regularly via a banking or savings app. But often it’s not something people have a good handle on.
Emma Cowley, an investment manager at Brewin Dolphin says: “The first step to creating a sustainable approach to spending and saving is just being aware of where your money is going every month. The second is to make sure that any new budgets are realistic. If you’re feeling under pressure the temptation might be to eliminate all unnecessary spending. But making sure little luxuries are built in and some joyful spending remains will help you stick to it longer.”
Our coaches also recommend avoiding an overly restrictive approach to budget. It’s important to focus on giving ourselves space in our budget for small luxuries and treats and stuff we enjoy, so we’re not solely focused on what we have to cut. This is especially true at the moment larger life goals might be put on hold because of the impact of inflation or rising interest rates.
As a general rule, our coaches recommend having a minimum of three months’ salary in emergency savings. But still, only 20% of employees we work with are actively looking to save. They typically have other priorities for their money. But emergency funds are one of the single biggest contributors to financial resilience.
While day-to-day costs are increasing, the inclination to save ‘for a rainy day’ might feel counterintuitive. And it can feel daunting when you’re starting from 0 (and have other things to save for) but starting very small and building from there is better than never starting at all!
Short, medium and long-term goals
There is a lot of uncertainty about how long we’ll be feeling the effects of inflation and interest rate rises. And that uncertainty can make it hard to plan, feel in control or accept shifts to your life goals.
But a key part of financial resilience is being able to prioritise your goals, and that means being clear on the short, medium or long term trade-offs you might need to make. Breaking your goals down into stages will help you get clear on what behaviours you might need to change, and for how long.
Emma Cowley, an investment manager at Brewin Dolphin says: “There are no hard and fast rules about what works best, so it’s important to keep your money mindset flexible. There will be some months where you might exceed your budget, or not hit your savings target. Life isn’t always predictable! So you need to allow your plans and goals to evolve as things change. But working towards something will help to make sure you’re making progress, even if it’s not perfect.”
The Right Support
Money is complicated. And the advice available can sometimes seem inaccessible and complex. But knowledge is power, and the more you know the better able you’ll be to make money decisions that are right for you and your circumstances. We also know from our research, having someone to talk to about money is the number one thing that helps people feel better about their financial future.
Now, more than ever, it’s important to be honest about what you don’t understand – rather than put your head in the sand and hope it’ll go away.
Emma Cowley, from Brewin Dolphin says: “The biggest red herring we see is the assumption that financial advice is too expensive, or not available to everyone. But that doesn’t need to be the case. Talking about money is one of the most important ways to improve your financial health and knowledge.”
Sam Spurell, head coach at Octopus MoneyCoach says: “Our research shows that 89% of people want someone to talk to about money, and it’s the number one thing that helps people feel better about their financial future. Financial education and 1-to-1 financial coaching also consistently rank highest as most wanted financial benefits.”
With costs of living continuing to rise, employers may be considering direct cash payments or salary increases to support their people. PwC and Barclays are two recent examples of companies who’ve taken this decision.
But paying more to compensate for increasing costs of living isn’t the only way employers can support their employees at the moment. It’s also not a viable solution for those who are already operating under tighter budget constraints.
In fact, it might not even be the best way to support people. Long-term financial resilience is about building new habits and changing spending and saving mindsets. A short term injection of cash may help pay bills now, but is less likely to change behaviour for the future.
Here’s five alternative ways employers can support their people.
For some, working one less day in the office and reducing petrol, train ticket or parking costs could make a big difference to their budgets.
And for those that do need to keep coming into the office, consider whether an investment in upgrading kitchen equipment or coffee facilities could help many make more cost effective choices around food purchases.
Where that’s not possible, engaging with local businesses to create discount arrangements could help both your team’s money go further, and support the local economy through inflation!
We know that most employers rank the engagement they get with financial benefits as low – our latest research showed 91% think it’s average or poor.
So now would be a great time to make sure existing financial perks (like a discounts platform) or opportunities for salary sacrifice benefits (like cycle to work schemes) are being resurfaced to help employees make the most of the support available.
Breaking down the taboo of talking about money is one of the most impactful ways you can support your people. Our research has found that 9 out of 10 people want someone to talk to about money, and talking about it is the number one thing that helps people feel more confident in their finances.
You don’t need to have a detailed financial education programme to be able to support your employees. At the moment, consistency and normalising financial worries are the most important elements.
“Money is an emotional issue that’s already hard for people to talk about. So it’s better to focus on providing support that is simple and accessible instead of trying to have all the answers/solve every challenge” says Matt Downs, employer partnerships.
There’s no one-size-fits-all when it comes to money worries. So the more employers can do to support different groups within their workforce, the better.
Increasing costs will be impacting people very differently. For example, consider those earlier in their careers. Some may have started work during Covid and built spending or saving habits in a time of lockdown that feel hard to adjust. Or they may be living at home, which on one hand may mean they’re inoculated from some rising costs, but the prospect of moving out may be on hold.
Equally, be aware that the higher earners in your workforce will also be feeling the pinch. They may have more fixed outgoings and less ability to quickly adjust spending, and face bigger lifestyle adjustments as a result.
Employers recently told us that financial coaching and financial education are the number 1 and 2 financial benefits they want to offer employees.
For employers who are able to invest directly in individual support, funding 1:1 financial coaching for all their employees is a great way to provide support here-and-now, as well helping teams build longer term financial resilience.
For example, Phoenix group has been providing financial coaching for their employees as a salary sacrifice benefit since 2021. But as part of their response to supporting employees through the cost of living crisis, they will now be fully funding financial coaching for all of their 7500+ employees.