How to overcome employee financial phobia, its impacts on wellbeing and your organisations goals

There’s no question since the cost-of-living crisis broke out employers are recognising the financial wellbeing of their people is important.

The impact on organisations is not only financial.

Reputation, attraction and retention suffers; some 76% of employees would be attracted to an employer who they perceive cares about their financial wellbeing. (Chartered Institute for Personnel Development).

Yet there is little understanding of what factors affect their people’s financial wellbeing and how to effectively support them.

Spoiler alert it’s not always about pay levels, though this is important.

One factor is Financial phobia

A recent poll of UK based HR professionals when asked if Financial phobia is impacting on the wellbeing of their people and their organisation shows:

• 56% responded - Yes

• 5% - No

• 17% - Didn’t know

• 22% - were not aware of what Financial phobia is

  
  

Financial Phobia is not a new phenomenon, it has been recognised for over two decades, and has been summarised by Psychologists researching Financial Anxiety as:

“a syndrome where people have an uneasy and unhealthy attitude toward engaging with and administering their finances in an effective way.” (Burchell, 2003).

Put it another way

The impact it has on individuals, their families, their work and on the workplace are serious and significant.

Individuals and families are impacted

Stress, debt and mental ill health issues result

·       We saw this first hand at the charity where I was Deputy CEO; 90% of people we helped who had problem debt, reported a mental ill health condition, an aversion to; filling in forms, opening letters, speaking to someone for help, poor financial literacy and lack of understanding of financial products.

·       People lost homes, jobs, assets and devastatingly their family life connection

·       In 2023  the CIPD reported over 100,000 people every year attempted to take their own life while struggling with problem debt.

Employers suffer

Absenteeism related to financial worries and dealing with money matters is costly with 4.9 worker days lost each year because people took time off to deal with (emergency) financial issues.

Presenteeism is a major concern, people send 3.5 working days a year worrying about money whilst at work.

Then there is the impact on line managers and HR teams dealing (often unaware of personal issues of their people) with performance issues, often going down the Performance Improvement Plan route, which is time costly, demoralising for employees and pulls on stretched management resources.

The cost to organisations

The estimated financial cost to UK business productivity is £120 billion which dwarves the £34.9 billion as a result of mental ill-health.

Causes of Financial Phobia

The London School of Economics and University of Cambridge (Shapiro and Burchell, 2012) identified Financial Anxiety Scores correlated with implicit measures; meaning the causes of Financial phobia are being driven subconsciously.

For example; negative thoughts and feelings of low self-esteem, poor financial literacy and negative thoughts about money as well as their ability to manage it.

Subconscious triggers as a result of financial anxiety are often a result of an emotional experience around money formed early in life, usually by the age of seven; for example, parents often arguing over money, money scarcity, modelling parents financial behaviour, poor financial literacy and an inability to manage emotions and impulses, particularly when stressed.

Poor numeracy is an issue

Plain numbers charity report 80% of people have the numeracy level of a school leaver, whilst 49% of people have a numeracy level of a primary school child. Without fundamental numeracy skills people struggle to engage with financial basics and products.

How Financial phobia manifests

It wasn’t a surprise to my teams that people at breaking point or even worse turned up with carrier bags full of unopened letters from creditors which included notice of eviction, home repossession, bailiff turning up to remove goods and energy disconnection notices.

Another aversion strategy is putting off checking bank accounts, paying bills and not tracking accounts is common practise, often hoping for the best when withdrawing money at the cashpoint.

For example, regular lateness, poor quality of work, reduction in productivity, persistent requests for overtime, regular requests for pay advances, not eating a proper lunch, sudden mood changes and no longer contributing to meetings.

Spotting and supporting the signs of poor financial wellbeing driven by financial phobia

Five steps to safeguarding Financial Wellbeing and help people overcome Financial phobia

A pay rise is always helpful, yet alone it is unlikely to prevent poor financial wellbeing issues from re-occurring.

So, what else helps:

1.      At the highest level set out your stall with a Financial Wellbeing policy, this sets the tone and shows your people you value this, it helps people feel you’re on their side. Employees report they feel their employer will protect them from poverty as a result of just having a policy.

2.      Create a culture, led by leaders being vulnerable about their financial wellbeing, by being open and sharing stories. Create a culture driven down from the top which makes it feel okay to “talk about money.”

3.      Review your wellbeing strategy to include financial wellbeing as a key component, again this sends a signal to your people, that you recognise the importance of supporting people’s financial wellbeing journey.

4.     What's your people’s Financial Wellbeing Score? Do you have a handle on which parts of your workforce are in a Financial Emergency, are struggling to make ends meet or are comfortable. What if you knew those numbers. You could use this data to avoid issues further up the pipeline and measure tangible improvements in financial wellbeing against organisational KPI’s.

5.      Upskill your line managers, HR team, mental health first aiders and wellbeing champions to be Financial Wellbeing First Aiders; with the skills to support people whether they are in an emergency, struggling or want to improve their own financial wellbeing.

Financial Wellbeing First Aiders are trained to spot the signs of poor financial wellbeing, help people feel safe to talk about money, promote financial wellbeing in the workplace, have access to tools and resources that prevent poor financial wellbeing, help people overcome financial phobia and help prevent debt and money worries resulting in greater loss and pain.

To arrange a "find out more call" about improving Financial Wellbeing in your workplace or more about the Financial Wellbeing Score™ and Financial Wellbeing First Aider Training click here to go to the Money Beam website.

Saleem Shafi is founder of Money Beam and former Deputy CEO of award- winning financial wellbeing charity-Money Buddies. He is passionate about wellbeing, equity of opportunity and people recognising they have much to offer themselves and the world. He has guest spoken on national media including BBC, GMBTV and Sky on Financial wellbeing, debt and money guidance.