Tens of thousands of graduates and people new to the working world are lacking the skills to manage their money, which is leading to a decline in mental health, according to new research.
Poor financial literacy – the inability to effectively save, invest, and deal with debt – was uncovered in higher levels of young people versus their older counterparts* which found 18-24 year olds had a literacy level 14% lower than the national average.
More than half (55%) of junior-level workers worry about their finances with almost a fifth (19%) saying they have sleepless nights as a result. This compares to 30% of middle managers, such as directors and department heads, and 12% of senior managers, including CEOs and VPs.
Two-thirds (67%) of employees say money worries affect their work performance and this translates into five days per employee per year being lost in productivity by them spending time managing, or worrying about their personal finances. It’s estimated that mental health problems in the workforce cost UK employers £34.9 billion last year.
Just 7% of junior-level workers say they were given lessons on managing money at school, compared to 19% of middle managers and 32% of senior management, highlighting the topic has fallen out of the curriculum in recent years, and those in more senior positions received a better financial education at an earlier age.
Junior-level workers were twice as likely as senior management to believe that financial education would allow them to achieve their life goals, including buying a house, planning for a family, starting a business, and early retirement compared to senior management – 25% versus 12%.
A quarter (25%) of junior-level workers believe that they would be less stressed and anxious as a result of better financial education, 56% more than those in senior management positions. A fifth (19%) of junior-level workers believe that financial education would lead to them being happier, with the same percentage admitting to having sleepless nights as a result of financial worries
Stacey Lowman, Head of Employee Wellbeing at Claro Wellbeing, commented: “The contrasts in financial literacy between different seniority levels in the workplace are staggering. When you consider that the ability, or lack thereof, to manage money directly impacts mental health and productivity, it is clear to see that employers are well-placed to play a role in boosting the nation’s understanding of finances.”
“One in two junior level workers worry about money and as the cost of living continues to rise, this worry will only increase. Increased struggles with financial literacy can impact younger workers more as they get to grips with independent living for the first time, life after student loans and managing a full-time salary for the first time. Training and coaching will not only help people with their personal finances but there will also be transferable skills which cross over into a new-found understanding of finance, which can in turn benefit a business.
“While financial literacy is particularly low in junior-level employees, every member of the workforce can improve their money management, whether that be related to a change in their personal circumstances such as a promotion or having children, buying a new home or planning for retirement.”
*Financial Literacy Gap Report
