November 28 2022 | Simon Miller
November Highlight reel
This article is written by Simon Miller, who has over 20 years’ experience in financial journalism and is currently the Senior Financial Editor at nudge. US gives thanks for worsening data.
Ever get to the cashier and think, “I’m only about 80% sure I have enough money on my card to pay for this overpriced wine?” You’re not alone. Many of us struggle to manage our money and instead of facing up to this shortcoming we bury our heads. The Financial Conduct Authority found 24% of adults said they have “little or no confidence” in managing their finances and 46% of all UK adults report they have “low knowledge about financial matters”. We found ourselves wondering why? Why do so many of us avoid checking our balance or dealing with bills?
Guess what - it’s not your fault. It’s a human condition.
Ever heard of cognitive biases? It's like a shortcut for your brain. Biases help us process lots of information but limit our ability to make fair judgements and think too far ahead. All super important when making decisions - let alone planning out our financial future.
To add insult to injury, in the UK, we struggle to talk about money. In fact, for some, it’s considered a strictly ‘no-go’ area of conversation. According to Lloyds Banking Group report, 50% UK adults believe that talking about personal money matters is taboo, even more awkward than sex and religion. 43% of people admitted feeling embarrassed by talking about personal finances. And even when they do talk, 25% admit to not telling our family and friends the full truth. This is not healthy behaviour.
Environmental factors influence our behaviours too.
If talking about money is a taboo, what happens when we need to speak-up? The coronavirus shocked everyone, as a result, we have higher levels of stress day-to-day. Although health is a major concern, so is financial security. 66% of employees in the UK are currently feeling worried, stressed or anxious about their finances.
Before coronavirus, many were already crippled by debt. The debt issue is beastly, according to a recent Money Advice Service study, UK adults are hiding more than £96 billion of debt from friends and family, with the average hidden debt per person in the UK amounting to £4,164. Sadly these figures are expected to get worse. The ugliest part of debt is its impact on our mental wellbeing. There is an undeniable link between unmanageable debt and poor mental health. 1 in 3 people regularly worry about money to the extent that it has a negative impact on their mental health. This, of course, means there’s a direct relationship between understanding personal finance and positive mental health. Aha! There’s light at the end of the tunnel.
A turtle makes progress when it sticks its neck out.
Now, we all know talking helps us process anxiety. So what are we to do when it’s deemed distasteful to openly talk about money? You’re right. We need to do something about this and fast. But challenging stigmas and biases is impossible, right? Wrong!
A mixture of behavioural science, financial education and guidance can stand-up to stigma and short circuit our bias. At nudge, we have found that if you get people involved, give them the right information at the right time so they can act on it. Following each positive action with information that leads to another one - people soon start to feel empowered and confident to an extent that even we find surprising.
Ultimately, if you want to help others, or even yourself - it all comes down to financial education. When people learn the best actions to take for their financial situation, the benefits are unbounded - for the individual - for their employer - for the economy. But how do we change our behaviour from that of an ostrich to a lioness?
Here are our top four key considerations to help your teams (and you) find financial wellbeing through skills and education:
● Find out what type of education is required - what’s the brief?
When it comes to financial education, it has to be completely relevant and personalised. Education and information for a single 19 year old man will be very different to a 38 year old married mother of four. You’ll need to know the answer to critical questions like: what are the financial stress levels of your people? Who’s sole bread-winner? How many children do your people have? Is anyone a carer of elderly relatives?
● Personalised Communication - how can we share our knowledge?
It’s important to be able to talk, share and discuss information individually. The nudge platform is a great way to speak to your people regularly, clearly and with compassion. We’ve found people are 85% more likely to engage with messages that they feel are for them, and them alone.
● Proactive Education - how can we start positive behaviour change?
Give your people timely prompts as well as lifelong skills and knowledge. With ongoing help, they’ll be able to find a way to maximise their financial opportunities, overcome financial worries and make managing money stress free. Be proactive and give your people the help to take control now and come out of the crisis more empowered, positive and productive.
● Education means getting feedback - how do we continue to engage and improve?
Use real-time data to measure how well your people engage with your communications and benefits and how they all work together. Then the process repeats itself, in a non-stop virtuous circle of information gathering and refinement.
Together let’s break taboos, let’s understand our behavioural biases, and let’s go into this coming recession prepared and ready to build a stronger financial future. Having the confidence to manage money is empowering and improves mental health. As well as, the potential to benefit wider society and the economy by contributing to debt decreases, savings and investments.
It’s time to ostracise the ostrich within and change our unhealthy ‘head in the sand’ attitude to personal finances.
Here’s an easy way to help your people today - download our guide and find out, ‘How to support your people’s financial wellbeing now’.