Stuart Gentle Publisher at Onrec

Savings buffer key to improving employee financial well-being

A new report into the financial health of today’s employees reveals that the key to increasing an individual’s financial well-being* is improving their financial capability and encouraging savings

A new report into the financial health of today’s employees reveals that the key to increasing an individual’s financial well-being* is improving their financial capability and encouraging savings. The Barclays report, entitled Financial Well-being: The Last Taboo in the Workplace? challenges the widely-held belief within organisations that financial health is determined by level of income. The research, conducted with over 2,000 employees across Britain finds that the size of an individual’s ‘savings buffer’ – a pot of money set aside for unforeseen outgoings – and contributing regularly to savings, have a far greater impact on financial well-being.

The financial well-being of survey respondents was determined by their level of agreement with a series of statements relating to their current financial situation, including its impact on their sleep, work and relationships as well as their optimism about their finances in the future. The amount of time one’s savings pot will last in the event of stopping working emerged as the strongest predictor of financial well-being and was more important than individual or household income.

Across all income levels, over half (55%) of respondents with a savings pot that would last less than two weeks were found to be experiencing financial distress or discomfort. Among those respondents with a savings pot that would last for at least three months, the percentage reporting such financial discomfort dropped to 8%.

For those with a savings buffer of at least three months and a more modest annual income of less than £20,000, only 11% of respondents reported suffering these same problems with their finances – underlining the importance of a savings buffer over the level of income.

The research was commissioned by Barclays Corporate & Employer Solutions and Barclays Workplace Banking to highlight the crucial but often overlooked area of financial well-being in the workplace. The report calls for employers to tackle the taboo of talking about finances in the workplace and urges them to consider how they can help their employees become more financially savvy and better equipped to manage their personal finances.

Katharine Photiou, Head of Workplace Savings at Barclays Corporate & Employer Solutions, said: “Our research has shown that people - like computers - cannot function properly if they are loaded up with too many demands on their attention or bandwidth. When financial problems affect how employees think and operate, this can lead to a significant impact on their concentration and productivity in the workplace.

It is clear that simply providing someone with a steady salary does not ensure good financial well-being. Employers need to broaden their role by helping to improve employees’ capacity and capability to manage their personal finances, through education and guidance, by enabling employees more easily to manage their finances at work and through specific solutions provided in the workplace.”

The report also includes insight from research conducted with over 100 employers and reveals a clear disconnect in the workplace between the views of employers and employees when it comes to financial well-being. In particular, conflicting views were identified in relation to whether employers are concerned about their employees’ financial health and about whether it was acceptable for employees to manage their finances during working hours.

Employee respondents also expressed a desire for help and guidance from their employer in relation to better managing their finances but a minority were satisfied with their employer’s efforts in this area.

The research analysis in the Barclays report applied a financial health segmentation** to survey respondents and found that a significant number of employees would benefit from greater employer support to manage their day-to-day finances as well as education about the benefits of a savings buffer. The four financial health categories are: Comfortable, Coasting, Balancing and Slipping. Based on this segmentation, the report finds that almost two thirds (59%) of today’s employees are in the ‘balancing’ category, focusing on managing their current financial situation rather than saving for the future. More than one in ten (11%) respondents fall into the ‘slipping’ category – they have no savings and are regularly spending more than they earn.

Further findings of the report include:

The ‘Sandwiched’ Generation

  • Employees in Generation X, many of whom are at their earning peak but are feeling the strain of being ‘sandwiched’ between supporting their children and elderly parents, are no more financially secure or savvy than the younger Generation Y employees - only 15% of Generation X respondents have a savings buffer of six months or more.

Employer-employee disconnect

  • 69% of employers believe that employees feel that their organisation is concerned about their financial well-being, when in reality only one in 10 (10%) employees actually believe this.
  • Almost one in five employees (17%) said they would value more guidance from their employer with managing their finances.

Greater education and workplace support is required

  • 59% of employees fall into the ‘balancing’ financial health category, focusing on managing their current financial situation rather than saving for the future.
  • More than one in ten (11%) employees are in the ‘slipping’ category - they have no savings and regularly spend more than they earn.

Impact on the workplace

  • Almost half (46%) of employees said they worry about their finances and just 35% feel optimistic about their financial future.
  • 18% of employees said they often lose sleep worrying about their finances.
  • 20% said that financial problems often interfere with their work.

Katharine Photiou continues: “Whilst much work has been done in the physical and health well-being space in the last decade, our research reveals that employers are missing out a vital element in their strategies – financial well-being. In terms of financial health, our survey found that one in ten employees are in the slipping category.  If the same proportion of employees had a serious health issue, it would be viewed as an epidemic and the employer would apply urgent medical attention in the workplace.  The same approach should be applied to addressing the critical issue of financial well-being.

“Talking about money is often seen as a taboo subject, not just in the workplace but in society in general, however our research shows there is a clear desire from employees for help with managing finances from their employers. It is imperative that organisations tackle this taboo head on and put tailored solutions in place to ensure their workforce is financially healthy and secure, today and for the future.”

The research highlights that ignoring employees’ finances can have a significant impact on the bottom line, explaining that lost productivity caused by employees worrying about their financial situation could cost organisations 4% of their payroll.***

Lesley Uren, talent management expert at PA Consulting Group which was commissioned to produce the report: “Our research suggests that most employers would like to be doing more to help their employees with their financial well-being. And yet, while 60% say they want to do something to help, very few are actually doing anything about it now despite the impact on both organisation productivity and risk. An even smaller number have made financial well-being part of their employee value proposition. This really needs to change, especially when you consider the focus given to other aspects of employee well-being, such as physical health. What companies need to do is bring this subject out of the shadows, take stock of what they currently offer and begin to invest in products and services that can help employees build their long-term financial well-being.”

* Financial Well-being is defined as: ‘Being and feeling financially healthy and secure, today and for the future.’ It involves having adequate financial resources and capability and capacity to make informed decisions in order to attain and maintain financial security, and the motivation and resilience to achieve this. 

**Financial health segmentation:

Comfortable: People in this segment are savvy and financially secure; they have a healthy savings buffer that would last them for six months or more if they lose their source of income. They are more likely to stick to a budget, have good financial discipline and are less likely to miss payments.

Coasting: People in this segment are usually financially secure, with a savings buffer that would last them for 6 months or more if they lose their source of income. However, they are not currently saving regularly to secure their future.

Balancing: People in this segment are able to manage finances in the short-term. They do not miss important bills/payments or have to regularly borrow to make ends meet. They have less than 6 months savings.

Slipping: People in this segment have hardly any savings, many of them would find it tough to make ends meet and regularly spend more than they earn. They are more likely to use more expensive forms of borrowing (e.g. pay day loans), miss important bills/payments and borrow from family/friends.

*** Based on ‘The lost productivity equation’ which takes the percentage of employees affected by financial problems (20%, ref: Garman, Leech and Grable) and the estimated impact on their individual productivity (-20%, ref: Institute of Employment Studies), to calculate the estimated cost to an employer as a percentage of its overall payroll costs.


Financial Well-being: The Last Taboo in the Workplace?  is based on quantitative research undertaken in December 2013 and January 2014. To produce the report, Barclays commissioned PA Consulting Group who conducted a YouGov survey of more than 2,100 employees in Britain working in a variety of sectors and across a wide range of earning brackets, and a survey of more than 100 employers.

About Barclays:

Barclays is a major global financial services provider engaged in personal banking, credit cards, corporate and investment banking and wealth and investment management with an extensive international presence in Europe, the Americas, Africa and Asia.  Barclays’ purpose is to help people achieve their ambitions – in the right way.

With over 300 years of history and expertise in banking, Barclays operates in over 50 countries and employs approximately 140,000 people. Barclays moves, lends, invests and protects money for customers and clients worldwide.

Barclays is a leading global wealth and investment manager providing international and private banking, wealth planning, trust and fiduciary services, investment management, brokerage services and research to private and intermediary clients around the world.