These are the top 3 expert tips for employers who want to improve money habits in young employees

Those entering the workforce for the first time need education not condemnation when it comes to managing debt and disposable income. Moreover, they deserve acknowledgement from employers, parents and society at large that they’re not “clueless” about money as many reports would have us believe, they simply don’t have much to spend: never mind save.

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And student debt isn’t necessarily the culprit here. In fact, according to MoneySavingExpert, the shocking and well-worn “students are leaving university with £50,000 of debt” media headline might actually be a bit of a red herring: a meaningless figure when you consider that once you leave university you only repay the debt you’ve accumulated when you’re earning above £25,000 a year (increasing to £25,725 in April 2019). Even then it’s fixed at 9 per cent of everything you earn above that. What’s more, after 30 years any remaining debt is written off.

The problem is more due to the disproportionate balance between low wages, low savings rates, bare minimum Auto Enrolment pensions (as opposed to the Defined Benefit schemes of old) and, on the other end of the scale, today’s high cost society.

As if Millennials / Generation Y / Generation Rent didn’t have enough labels to contend with, they’re now being branded the “Yolo” Generation, an acronym for “you only live once”. It’s a descriptor used to paint a picture of individuals who have no plans for retirement, no savings and yet exhibit “live for now” spending traits. Any disposable income they might have going on SuperFood coffee, eco yoga and backpacking around remote National Trust routes.

Why bother?
The sad fact is that even if 18 – 34-year olds were to save, there are precious few achievable targets. Their parents’ generation had home-buying goals to work towards. But UK house prices have increased to such an extent in relation to incomes that today’s youngsters don’t stand a chance.

According to a report in The Telegraph, first-time buyers in London are on average now putting down a deposit of £96,000. Even if an individual were to save £500 per month, it would take them around 16 years to be able to afford the deposit alone. Obviously, they would also have to factor in whether their salary could then withstand the mortgage repayments on the property, which is likely to cost at least half a million pounds.

Even outside London, average first-time buyer house prices are nearing £200,000: no small amount when the average salary is around £27,000.

The UK is now ranked third worst among developed countries for high house prices in relation to incomes, behind only Denmark and Greece, according to a study by the Resolution Foundation, reported in The Guardian.

It’s perhaps not surprising then that home ownership rates have declined far faster in the UK than anywhere else.

“Generation on generation progress has been all but wiped out for millennials, whose home ownership rate in their 20s, at 33 per cent, is half that for the baby boomers at the same age (60 per cent)” reports the Foundation.

Wellbeing in the workplace
So where does all of this leave employers? And financial wellbeing in the workplace per se? It’s safe to say that physical wellbeing still takes precedence over emotional and financial wellbeing in the majority of workplaces. But this is changing as the interplay between all these elements is realised.

Getting started: Expert top tips

First and foremost, listen to your employees, says Jeanette Makings, Head of Financial Education at Close Brothers. Then, when you understand where the pinch points lie and those at greatest risk, design a financial wellbeing strategy to meet those needs first and build from there. “Financial education can unlock the full potential of a benefits offering,” she adds. “Education doesn’t need to be expensive – many providers have e-Learning platforms as a starting point, including case studies, videos and personalised email nudges.” Close Brothers’ Financial Wellbeing Index found that as financial education levels rise, so does an individual’s financial wellbeing score: a diagnostic tool for designing financial wellbeing programmes.
Peter Briffett, Wagestream’s Co-Founder and CEO, concurs, adding: “Simple things like financial education, a flexible income and savings advice can be transformative to people, bearing in mind that many never formally are taught how to manage their finances. Financial wellbeing is a no brainer with the power to transform your people and your workplace.” Wagestream has created a ‘Just in Time’ financial education app in conjunction with The Money Advice Service, providing a library of expert tools, tips, articles and advice for employees.
Heidi Allan, Head of Employee Wellbeing at Neyber, adds: “Financial wellbeing support...can be as simple as sharing stories where people have formed good habits or have navigated their way out of a difficult situation.” Research by Neyber found that financial worries represented the biggest concerns of those in all age groups up to the mid-50s when worries around later life and physical health take over. It also found that young adults were actually aware of budgeting and managing money. Plus, they’re tech savvy, so new apps and services enabling money alerts and on-the-go tracking allow them to recognise and change habits.

The author is Tracey Ward, head of business development and marketing, Generali UK Employee Benefits.

This article is provided by Generali UK.

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