- Half (51%) of those between the ages of 25-34 say they are worried about money often or all the time, compared with 25% of those 55+
- Over a third of 25 -34 year olds (36%) say that money worries affect their work a lot, one in four (25%) reveal money worries are affecting their sleep and a fifth (20%) say they cannot concentrate.
- There is a need for financial education in the workplace, with over half of 25-34 year olds (57%) revealing they don’t know how to take advantage of certain tax allowances and reliefs such as annual ISA Allowance.
New research from Close Brothers’ Workplace Financial Wellbeing Services digs into the financial wellbeing of the UK’s workforce.
There has been considerable discussion in recent years over ‘intergenerational’ unfairness, and whilst this new data suggests a more nuanced picture, it is clear that certain age brackets are feeling the effects of the current economic situation more than others.
Half (51%) of the UK workforce aged between the ages of 25 – 34 report financial distress, saying they are worried about money often or all the time. They are in the eye of the storm of inflationary pressures and higher interest rates and are often juggling childcare costs as well. This is double the number of those aged 55+ (25%). For half (50%) of those aged 25 – 34 year olds and for 39% of 35 – 44 year olds, the main source of these money worries is rising mortgage and rent costs. Being able to keep up with normal living costs is also one of the main concerns, affecting those just entering the workplace to those with more established careers (43% for 25 – 34 year olds and 47% for 18 – 24 year olds compared to 28% of over 55s).
These worries are having a substantial impact on the day-to-day lives of 25 – 34 year olds with one in four (25%) revealing money worries affect their sleep, one in five (20%) saying they cannot concentrate, and just under one in four (23%) saying they struggle to make decisions. It is unsurprising therefore that 36% of this group also say this impacts their work a lot. This is a similar figure amongst those aged 18 – 24 years (36%) who also report similar levels of distress.
That being said, the older generation is not entirely carefree. Retirement and illness top the list of concerns for those over the age of 45. Nearly one in three (29%) 45 – 54 year olds and a similar number of over 55s (28%) say they are worried about coping financially if they were to fall ill whilst 41% of 45 -54 year olds are worried they won’t be able to afford to retire.
The need for financial education
Tellingly, the research revealed the younger generations are less likely to know how to take advantage of all tax allowances and reliefs available such as Marriage Allowance, annual ISA Allowance, Dividend Allowance or Interest Allowance. Of those aged between 18 and 24 49% admit they don’t know how to use them or aren’t even aware of them. This rises to 57% of those aged 25 – 34 years compared to 36% of those over the age of 55+. This indicates a strong need for financial education within the workplace, across all ages, which could in turn alleviate some of these money worries.
This also correlates with the responses when asked which workplace benefits would most positively impact financial wellbeing. Financial advice comes top amongst 25 – 34 year olds (42%). With rising mortgage costs being a top concern for 50% of this age group, it’s not surprising they value mortgage advice next; 33% compared to just 8% of those aged 55+.
Financial protection can offer some reassurance, especially in times of economic uncertainty and so it’s no surprise that these are valued by employees. Policies like death in service cover and critical illness cover are most valued by the mid-lifers and older generation (36% of 44 – 55 year olds and 33% of 55+ said death in service cover would improve their financial wellbeing, while 40% of 44 – 45 year olds cited critical illness was of most value). Income protection peaks in popularity amongst the 25 – 34 year olds as well as the 35 – 44 year olds, who have mortgages to pay and childcare bills, while private medical insurance is something that is universally often offered by every company: whilst 57% do offer death in service benefits, and 48% offer private medical cover, only 28% of employers offer Income protection and just 20% offer critical illness.
Jeanette Makings, Head of Workplace Financial Wellbeing comments:
“It has been a uniquely precarious period for personal finances. Having emerged from the insecurities of the pandemic, individuals have been hit with the double blow of inflation and higher interest rates. While many recognised that the era of cheap money would inevitably come to an end at some point, the reality of its impact has been more painful than many dared imagine.
“At a time therefore when every penny counts, it isn’t helpful that the benefits on offer in UK workplaces don’t match the benefits that employees now value, leading to a mismatch between employee and corporate priorities. It’s clear that some workplace benefits are now outdated or may only be of relevance to a limited number of employees. Companies, by failing to align their benefits to employee need are not only not optimising their benefits spend but missing a trick to improve retention, engagement and productivity.”
