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Financial wellbeing benefits most valued by younger employees/Gen Z

Benefits | Wellness

Posted on: Thursday January 20, 2022

by Charles Ashwell, New Business Development Director

HR is putting increased focus on the needs of younger employees. Gen Z – those born from 1996 to 2012 – includes adolescents who’ll shortly be entering the workforce and young people in the early years of their career. 

Financial wellbeing is a key area of concern for this age cohort. Student debt, high rental costs and house prices, combined with wage increases which haven’t kept up with inflated living costs means fixed outgoings are taking a much larger proportion of a young person’s income than ever before.

So as an employer, what financial wellness benefits can you offer that will help you attract and retain the best young talent? 

Financial literacy 

This should be employers’ biggest priority to help younger workers avoid the negative mental health impact of poor money management. Employers are facing increased pressure to help their employees make good financial decisions, make the most of their earnings, and feel more in control of their money.

So, what challenges do Gen Z face that could be addressed by financial education?

1. New products, new risks

Exciting new financial products and platforms have taken off in the last few years. Many of them target young consumers, which is fine so long as their audience has the financial literacy to understand all the risks as well as the advantages.

Cryptocurrency - its unregulated nature means that it is fertile ground for fraudsters. Technology makes it very easy to impersonate celebrities’ emails or social media accounts and take advantage of unwary investors. Millions of internet users, particularly those with mental health problems, are in danger of losing money or sensitive personal information to scammers.

Even if the scheme is not a scam, extreme price volatility and a lack of industry regulation still make cryptocurrency a risky investment. 

Share-trading - instant-access share trading platforms have arguably revolutionised investing but pose a risk to Gen Z investors if they see investments as a ‘get rich quick’ scheme. Impulse buying stocks to follow trends on social media leaves young people vulnerable to huge losses if they are not financially literate enough to understand the risks.

Buy now, pay later (BNPL) – in theory these offer an accessible way for people to spread out the cost of their purchases. However evidence is growing that BNPL schemes can be a problem for vulnerable consumers, allowing them to pile up additional debt on top of other forms of credit such as credit cards and personal loans. Missed repayments rack up substantial late fees and so what is initially a small monthly payment can spiral into problem debt. 

2. Fraud 

It sounds patronising to say that younger workers lack the life experience to make good financial choices, especially as they’ve grown up with a wealth of financial information at their fingertips.

But despite being digital natives, the under-35s are now consistently the most likely group to fall victims to scams. Research from Credit Karma shows that scammers target this age group via texts, emails and social media, with reputable names such as Royal Mail and the NHS being used to reach victims.

Sadly, complacency does play a role. Two-thirds of those surveyed believe they would spot a scam, and that older people are more at risk of being conned.

But the fact is that younger consumers are being swindled by bank impersonators, social media scammers and phoney online retailers as criminals shift their sights to younger targets, not least because of their poor financial knowledge.

Visa reports that, with average losses of £6,000 per person, the under-30s accounted for more than four in every 10 victims of fraud last year. Nor are they clued up on the consumer protections in place to help them if they do become a statistic.

3. Misleading advice from social media

Many Gen Zers turn to online resources to fill a gap left by formal education.

But a recent study from debt management company Lowell found that 20% of 16- to 24-year-olds rely on social media for financial advice. This is not inherently bad, as some influencers do have justified clout and experience, but young people should already be financially literate before going to influencers for financial tips.

Otherwise, they could misinterpret one individual's experience as a one-size-fits-all approach, which is especially risky when it comes to topics such as investing.

A lack of financial literacy could result in young people running into money worries later down the line if they are not fully aware of the risks involved with different types of investments and financial products.

The solution? Financial education 

Employers are well-placed to help their younger employees educate themselves about financial matters. As well as the topics above, Gen Zers will also welcome advice on traditional areas of personal finance like budgeting, how to save, and getting on the property ladder.

Consider how your audience wants to consume this information. They will be comfortable with online learning via webinars, apps, or assessments - but sometimes support delivered over the phone or face to face is the most effective. Clinics, 1:1 financial mentoring, support groups, and budgeting advice can all be adapted to suit the employee communications style of your target audience. 

With the right financial education, you can empower your younger employees to effectively manage their finances for the rest of their lives.

Other employee benefits that support financial wellness

A key selling point of your benefits package should be financial products that can only be accessed through an employer. 

Tech benefits scheme

Staff can own the latest home technology like iPads, smart TVs and fitness trackers with convenient, affordable payments via salary sacrifice schemes, as well as saving on National Insurance contributions. Spreading the cost over 24 or 36 months means it’s a more reasonable way to make a large purchase for the employee or their family. And the fact that there’s no upfront costs, credit checks or deposits makes it accessible to people who might otherwise miss out.

Employers set a maximum value of products per person so employees aren’t at risk of overstretching themselves. By helping employees to take home exciting technology with no financial hassle and no waiting, you’re providing enjoyment – but in a financially responsible way.

Pay on demand

This gives employees access to a portion of their wages as soon as they have worked the hours, rather than waiting until the end of the monthly pay cycle. The idea is to alleviate cash flow problems along with the resultant financial stress and potential for going into debt.

Accessing wages before payday gives employees a higher sense of control over their cash flow and budgets. As an employer, you set a limit on how much of their pay packet staff can stream per month – usually this is around 30%-40%. 

For employees who want greater financial flexibility, wage streaming is a handy way to access funds without borrowing. Providers also offer fintech-enabled features like personalised financial advice, wage tracking (visibility of earnings in real time) and gamified savings accounts to encourage financial resilience.

Conclusion

Equipping your staff with the tools to help them avoid falling into financial difficulty will pay dividends when it comes to loyalty and productivity.

The bottom line is that employers can and should look beyond employee wellbeing perks – your benefits package can be vital in attracting the best and brightest talent now and in years to come. 
 

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