January 25 2023 | Team nudge
The ultimate financial wellbeing program [webinar write-up]
Watch our webinar on-demand and learn how to create the ultimate financial wellbeing program
And here’s what employers can do about it
Considering the number of banks and financial services apps in operation, it’s hard to imagine people being excluded, but millions remain undeserved – and some aren’t served at all. According to a report by the Federal Deposit Insurance Corporation (FDIC), more than 5% of U.S. households (approximately 7.1 million households) were un-banked in 2019. Bank status notwithstanding, an even more significant number of people are struggling to achieve financial wellbeing. Our latest market-leading global research surveyed over 11,500 people across the world and found that five in ten people feel excluded from the personal finance ecosystem.
When comparing respondents in EMEA, APAC, and LATAM and North America, North American respondents were the least confident that their children would "meet or exceed'' their monetary success and most likely to respond that they were depressed by their current financial situation. Given these challenges and the ongoing concerns involving Covid, inflation, and market fluctuations, employers should take this opportunity to help their people plot a path to financial security and prosperity. A good place to start is to look at how their employees feel about their finances and the ways in which they currently struggle:
Many people feel anxious and overwhelmed
It is not uncommon for people to have concerns about their financial situation, especially given the economic challenges that many have endured over the last year. Our research found that women experience this uneasiness most strongly, with almost half of women globally (48%) feel anxious about their financial situation compared to 41% of men. This sentiment carries over to long-term perceptions of achieving financial solvency in one’s golden years, with 60% of men feeling confident that they’ll have enough saved for retirement versus 49% of women. Most women (55%) also feel that the deck is stacked against them and that access to wealth creation is often unfair. In the US, most Black respondents (57%) report feeling the same way.
The access to reputable information is uneven
Few people globally have been given a proper financial education, with just 13% of respondents stating that they learned how to manage their money at school. This is slightly more common (21%) among individuals with a higher income, but the vast majority remain uneducated about personal finance in any income bracket.
In looking to improve their financial status, many of us (23%) watch YouTube and 18% of Gen Z respondents rely on TikTok videos. While there may be helpful insights to gain from others online, it would be impossible to verify the authenticity of every video or the accuracy of every tip shared. But at a time when many people feel they inherited their monetary behaviors – half (51%) attribute their choices and current financial status to their upbringing – it’s hard to know where to turn. What’s more, 17% of people say they did not have anyone in their lives who could teach them how to manage their money.
Financial advice is currently an afterthought
With potentially unreliable help at home and unverified advice from content creators, it may appear that many people will continue to endure these financial challenges for the foreseeable future. But there is another party that can make a difference: employers. As the provider of the lion’s share of an individual’s income, employers already play a significant role in the finances of most people across the globe. Employers have the potential to offer crucial support and tools in this area, but are they? And if not, what actions should they take?
Despite the many ways that employers are involved in their employees’ finances – compensation, healthcare, and other perks – most people (59%) don’t receive personal financial education related to their circumstances and interests as an employee benefit. Some top employers are already helping their people maximize financial opportunities, overcome financial problems and make managing money stress-free, but there is a divide here as well.
Much like the gap in sentiment and anxiety, just under half the male global population say their employer initiates regular communication about how to improve their financial wellbeing, compared to just 36% of females. Seventeen percent of male respondents have been provided with "employer-supported financial counseling or courses," as opposed to only 12% of female respondents.
This lack of communication shows that many employers miss out on an opportunity to better connect with and support their employees. Even if they did, over one-third (35%) wouldn’t know how to personalize their financial advice because they are unaware of the significance that their employees’ salaries play at home. Are they supporting a spouse, kids, or other relatives? Do they have ageing parents that they support? All of these aspects need to be factored in, but the lack of awareness holds employers back. Employees can’t overcome these challenges on their own, but their employers can make a difference with the right tools, support, and more frequent personalized communication.
Bridge the gap in financial support and education
Organizations need to take the time to learn more about their employees, especially the financial aspirations that are most important to them. For example, most people (55%) are focused on having enough money to pay their bills and pay off their debt in order to retire early. This varies greatly from respondents in APAC, who were more likely to want money for leisure, dream weddings, and to send their children to private school.
By better understanding their employees – what they want and need from their finances and how they plan to achieve it – employers can better understand what’s missing from the equation. This information will empower employers to select the necessary tools to help guide their people through their current and future financial challenges.
Read the report
Our market-leading global research aims to help organizations grow through enhanced inclusion, a globally aligned benefit experience and a workforce that's financially well.
Let's disrupt damaging money habits together -and build truly inclusive global financial wellbeing strategies.Global research report