Financial security is an extremely important and very relevant pillar of wellbeing, it is a topic that we can all resonate with because, at some point in our lives, we all (except the very fortunate) struggle financially. We all experience the potentially debilitating fear of debt, the frustration of saving, the uninhibited use of credit and the need to fund our retirement and save for the future.
As you will have seen in the first week of this blog series, in our wellbeing survey, I scored 5 out of 10 for financial security - not a particularly high score. For the avoidance of doubt and to my colleagues who have already skim read this page looking for my salary, I am not going to give you full details of financial situation. Instead, I am going to talk you through the events in my life that have led to where I am now financially.
Without sounding like the beginning of an autobiography, I started my career at a large insurance company in Norwich and my first salary in 1999 was £7,800. I lived at home and I can honestly say that it still feels like those were the days where I had the most disposable income in my life. I worked my up and, within five years, reached a salary of approximately £12,500 (the exact figure escapes me). I still lived at home, I had no student debt, all my money was my own (aside from rent to my parents) and I was very comfortable. However, I was and still am a very ambitious person and I wanted to further my career. I decided London was the right place to do this so I left home, moved to Crystal Palace and started my new job with a salary of approximately £20,000.
“We all experience the potentially debilitating fear of debt, the frustration of saving, the uninhibited use of credit and the need to fund our retirement.”
This is the point where my financial situation got interesting. As you can probably imagine, jumping from c£12,500 to c£20,000 felt like a massive leap and I was over the moon that at 21 I could command such a salary - but what I hadn’t considered was that while my salary had increased, I was now living in one of the most expensive cities in the world, paying my rent, bills and food for the first time and the gist of it was…I couldn’t.
This was all before the financial crisis and when credit was easily accessible. Fairly quickly, I accumulated debt that reached a relatively eye watering level, and was in a situation where my outgoings exceeded my income. At the time I was okay with it because I was confident that if I worked hard I would find a level where my income exceeded my outgoings and then I could motor past it into financial bliss. I did (at least the first part), but it left me with a lot of debt that I am still paying off and has significantly delayed me buying my first home. I am now nearly 32, I am married, father to my 5 month old son and I couldn’t be happier with my family life. However, there is no getting away from the fact that some of the naïve and frivolous decisions I made in my 20’s now affect my family. I tell you this, not because I want you to feel sorry for me, I am very happy and my salary is such that I can comfortably support my family on my income alone, but because I know that I am not alone - far from it. In fact, I would suggest that debt is now, unfortunately, the norm and red is the new black.
So why should employers care? I can tell from experience that, during certain periods of financial stress, I was giving nowhere near as much to my employer as my role demanded, it was at points debilitating. I am not suggesting that companies have lots of employees in this position (although they probably do) but even small financial worries can play on the mind and significantly impact performance. Aside from that, how do we expect people to contribute to their pensions and retirement if they still have problem debt? Will people be able to afford to retire at a sensible age if they are paying off debt into their late 30’s and 40’s?
“What is clear is that there is a big problem with personal debt in the UK and it needs to be addressed.”
Within British society, talking about salary and debt is still considered a taboo but it is this attitude that I believe is aggravating the issue. It is very difficult to seek help and support if you are unwilling to discuss it in the first place. In hindsight, I do wish that there was advice, support and guidance provided to me in my 20’s. I am not suggesting that it wasn’t available - it was - but I didn’t know where to go and, in all honesty, I wouldn’t have sought it out anyway. This doesn’t stop me from whishing that someone had approached me and asked me if I had financial issues that I wanted to discuss.
Education is part of the answer but that doesn’t help those in debt who can’t get themselves out of it. How much responsibility does the employer have and what can they do to help? This is where some employers are looking to evolve their support and where new products will appear over the coming years including employee peer-to-peer lending, employer-sponsored short term lending and employer-sponsored benevolent funds to name a few. What is clear is that there is a big problem with personal debt in the UK and it needs to be addressed.
So, what improvements do I need to make to improve my financial security score? Unfortunately, it takes much longer than just a few months to have an impact. I am lucky that I have already addressed my debt issues and that I am now in a financially comfortable position, despite the impact that debt has had on purchasing a house etc. However, there are still improvements that I know we can make as a family, for example, better budgeting with my wife that also involves some saving for a rainy day.
This article first appeared on Reward Guide as part of the 'Six Pillars of Wellbeing' 15 week blog series and was written by Carl Chapman. For further enquiries please contact Damian Stancombe, Head of Workplace Health and Wealth.