Insights

The State of Financial Wellbeing in 2023

14 Feb 2024

3 min read

"If you could make your whole workforce 13 IQ points smarter overnight...would you?"

Your colleagues aren't just 'distracted'. They're giving over valuable cognitive power to money stress, instead of work.

This is happening because financial services overlook 50% of them, while inflation has compounded the problem.

Government and policy are still catching up - but employers can help, and they'll be rewarded in productivity if they do.

Unlucky 13

The number 13 demonstrates the impact of financial stress. It is measured not in pounds or days, but in IQ points. This is actually not new research, it's a study from Harvard University in 2014, where their studies demonstrated that the same person measures between 10 and 13 IQ points lower when managing financial worries, vs. when not. The significance of this difference is obvious when you note that 13 IQ points can take someone upwards from 'average' to 'superior' intelligence, or downwards to 'borderline deficient'.

When you translate this into the workplace - it becomes obvious how much of an impact money worries can have, not only on staff health and wellbeing, but on company productivity.

Solving for financial wellbeing

When we solve for financial wellbeing, when we give people choice and control and visibility, we see people work 11% more hours. We see people take responsibility for their wellbeing. They have the data, they have the information, and they make a really positive choice to build their own financial habits that work for them and their money.

We also see 85% of people spend less. And this is a really counterintuitive finding, because our gut feel says if you open up pay for people, they're going to spend more. They do not. They spend less. They save money. They buy things when they're on sale, they calm down. They can think more clearly. They're less likely to be impulsive. They can book a holiday on sale. They can take advantage of bulk discounts. They can save financing costs. So this has a material impact on people's financial wellbeing.

When we solve for employees' financial confidence, we build confidence and happiness in all other areas of wellbeing.

Key takeaways

13

IQ points - the impact of financial stress on cognitive capacity

11%

increase in hours worked per person, when given access to financial wellbeing tools

85%

of people spend less with visibility over worked hours and accrued pay

Translating into workplace policies & practices

• Women, ethnic minority and disabled workers are the most financially excluded. Financial wellbeing is a huge DE&l unlock for employers - explore policies and benefits that are going to empower your entire workforce,especially those who sometimes get missed off the list.

• Think about security of work and pay as foundational to all other practices - they are more powerful than all other benefits.

• Work hard to create flexibility for staff outside head office: they are often the most excluded and underserved by society, feeling the squeeze.

• Different employees are at different stages in their financial lives: you need to understand their needs and offer a range of solutions in order to really help them.

• We live two financial lives: today and tomorrow. Advanced wellbeing strategies create a sense of control to make today less stressful, and give them confidence to plan for tomorrow.

This topic featured on our keynote agenda for the Financial Wellbeing Forum, in October 2023. Our expert speakers and panels also covered a range of topics relating to employee engagement, workplace wellbeing, and social mobility.