Financial worries often cause extra stress but when this happens during uncertain times, it’s not surprising that these worries can begin to feel overwhelming.
During this pandemic, there’s been lots of advice for employees on how to look after their physical and mental health.
However, there’s not been so much guidance on how to cope with financial worries. This is most likely because everybody’s financial situation is different. In addition to personal financial situations, there is also the concern over the impact COVID-19 is having on the economy. This creates more uncertainty on what the future may look like for us all.
Economic impact of COVID-19
Financial wellbeing providers, Neyber, have analysed the economic impact of COVID-19 on employment and the cost of living in a recent blog. Here are some of the key takeaways:
“Not everyone is affected in the same way, and some of us have been able to work from home, while others have been put on furlough by their companies. However, as companies are likely to need to reduce costs, not all businesses will reopen as normal once lockdown eases. As a result, not all employees will be guaranteed to get their jobs back, and those that do may find themselves with reduced working hours, some changes to how their jobs work or potentially find themselves facing redundancy. NIESR predicts that unemployment will rise by around 1.5 million this year.”
Cost of living
“Generally speaking, when a country goes through a recession, it can have the effect of reducing wages because more people are looking for jobs. This could mean that your wages don’t increase in line with inflation (for example, the price of a loaf of bread might increase but your salary remains the same, so your purchasing power has decreased – you can buy less with the same amount of money). To prepare for any impact, individuals should review their spending and aim to see if there are any areas you can cut back on. The first thing to do is to look for savings on your core living costs like mortgage, utilities, insurance and mobile phone contracts.”
Supporting financial wellbeing
It’s a stressful and uncertain time for many. So creating an environment where people feel comfortable talking about finances is really important. Here are some things to consider when supporting your team with financial wellbeing:
Having open conversation is key
Financial wellbeing can have a huge impact on someone’s overall mental health so it’s vital businesses provide support in this area. One of the most important things is to cultivate a culture that promotes openness and safety. This creates an environment where people feel comfortable to talk about any issues they are facing.
At Xero, we’ve often find that people are struggling with their finances through everyday conversations. Helping people feel comfortable talking about finances means we can support them in the best way we can.
Supporting teams with the right tools
When you find out that someone is struggling, it’s important to support them with practical solutions like salary advances if you’re able to. Alternatively, you can guide them towards financial education or emotional support. You might not always have the answer, but helping to point people towards the right tools can help.
For example, we have partnered with Neyber, the financial wellbeing provider, to give employees access to educational resources. Neyber provides tools to help with financial health in areas such as moving house or taking out loans. This service has proved to be a huge success for us at Xero and could be beneficial to you too.
Review and adapt
As with any area of wellbeing, it’s important to measure and track the sentiment of your employees. Things like fortnightly or monthly anonymous surveys will help record how staff are feeling and get feedback on wellbeing initiatives. You can then use that feedback to work out what new initiatives would help enhance their financial wellbeing in future. The information can also help you identify areas for improvement.
To support you in taking action and preparing for tricky times ahead, Neyber have provided a recession checklist here.