Christmas and New Year Financial Pressure greater than ever before
A year of lockdowns, closures and furloughing means that this winter and Christmas season is going to be one of the hardest yet.
We all know that Christmas can be a particularly tough time of year financially. The expectation to spend and increased incentives to borrow mean that many wind up in long-term debt come January.
This year, the effects of the outbreak and extended lockdown mean the Christmas period could be the toughest yet. An early payday in December puts workers on track for a financially drawn out January.
Employers have the power to stop financial pressures from having a lasting impact and give their staff a better 2021.
Financial pressure and the first lockdown
Whilst the furlough scheme has supported employees throughout the outbreak, an extended period of reduced wages has had a devastating impact.
In total, 9 million were furloughed at a possible 80% of regular income. The average monthly household expendable income has been reduced by £515 – a 17% reduction (CEBR).
2.87 million people affected by coronavirus are now at risk of long-term debt problems (StepChange, Tackling the coronavirus debt problem).
A second lockdown and a second period of strain
As we moved out of the first lockdown, there were high hopes for a steep recovery. A second has challenged an already delicate financial situation for many.
A survey by Compare the Market found that 35% of people are concerned about paying bills throughout a second lockdown. 33% say that they will struggle to look after their families (Compare the Market).
When it comes to our mental wellbeing, the shorter days and continued measures means that this second phase is going to be tougher mentally.
Paul Farmer, Chief Executive of mental health charity Mind, says that a second lockdown could be “the greatest test of our mental health this year”.
Christmas expense and the January blues
80% say that they overspend every year in December after receiving their early pay cheque. This means that 1 in 6, equivalent to 8 million adults are expected to be in debt by mid January (Wagestream survey).
Deloitte predicts that holiday retail sales are still forecast to rise by 1 – 1.5%. This demonstrates that families will still want to prioritise celebrating at Christmas.
What can be done?
It’s certainly not all doom and gloom. As an employer, you’re in the perfect position to be a financial lifeline for your staff and make the Christmas period a better one.
Earned Wage Access
As we’ve seen throughout this outbreak, increased liquidity is vital to helping us survive. That doesn’t stop when it comes to our wages.
Earned wage access or earned salary access schemes provide employees with access to their wages as they’re earned.
Earned wage access provides effective liquidity. EWA means that they can cover unexpected expenses, manage money better and build towards a more secure financial future.
This increased liquidity has already helped Wagestream users throughout the lockdown.
86% of users have said that Wagestream has made them feel less stressed throughout the COVID period
67% said Wagestream makes them feel more in control
46% have avoided using a payday loan throughout the COVID period
If you want to take action now, and stop the financial pressures of 2020 going into the new year, provide your staff with earned wage access today.