- Financial education
- 4 minute read
Equally, most of us will know a Drifter – that friend or colleague who seems to exist in an eternal fog of confusion, and yet somehow manages to just about get by.
Most of us would probably put ourselves somewhere in the middle. We might appear focused and organised at work, while our social life looks like complete chaos - or vice versa.
While it’s true that some people find being organised easier than others, getting better at it and establishing habits that work for us as individuals is as much about practice as it is about natural inclination.
The same can be said of financial planning and budgeting. These are essential skills for everyone, and while they do require regular, ongoing commitment, the basic techniques are easily learnt.
Helping employees to better understand and plan their day-to-day finances has three key advantages – they will feel more in control, be able to cover unexpected expenses, and save more for the future. And that doesn’t just apply to low paid workers. Employees on higher salaries can also benefit from getting into better financial planning habits.
Being more in control
The adage ‘what gets measured gets managed’ holds true when it comes to financial planning. If someone doesn’t have a clear picture of their income and outgoings, it’s difficult to find places to cut back on expenditure, stay within financial limits and ultimately feel in control of their money.
While understanding day-to-day expenses is a part of this, there are other ways that employees can make sure they stay in control. These could include switching utility providers or regularly reviewing subscriptions to online services, weeding out those that aren’t being used any more or don’t offer good value.
Covering unexpected expenses
A bigger than anticipated car repair bill or a leaking roof can put a real dent in an employee’s finances. Helping them to create a safety net that will protect against financial surprises is a key benefit of building a good planning and savings habit. If employees do have to borrow, then helping them to access loans as the lowest possible cost and repay them in the most effective way is also essential.
Saving for the future
Being in control of today’s money and feeling confident about covering unexpected outgoings puts employees in a much stronger position when it comes to saving for the future. Planning and budgeting can mean the difference between a well thought-out short, medium and long-term financial plan and a vague sense that things might be OK in the future.
Like any activity, the more someone practices planning and budgeting, the better they will get at it - and the more it will become an integral part of their everyday activities. Employers can help with this by offering regular support. A one-off budgeting workshop is a good start but helping people to create a long-term planning habit will reap even greater rewards. That could mean providing access to good quality budgeting tools, credible websites with money-saving tips, and face-to-face guidance where appropriate. Making sure that workplace benefits that help employees save money are clearly communicated and easily accessible is another great place to start.
Just as importantly, it’s about creating a healthy culture when it comes to money. Making good financial wellness a part of the workplace fabric can help good planning and savings habits become the norm for Arrangers, Drifters and everyone else in between.
Planning and budgeting is Step One in Close Brothers’ Seven Steps to Financial Wellness. In our next article, we’ll explore Step Two: managing debt.
If you would like to know more about financial education in the workplace please email financialeducation@closebrothers.com