The lack of savings among the UK population is a growing cause of concern, with surveys suggesting that a quarter of adults having less than £100 tucked away. This isn’t just a personal finance issue, it’s a pressing responsibility for employers too

The cost of living crisis has put a heightened focus on financial wellbeing, prompting an increase in the number of businesses offering financial wellbeing support; 90% now have some form of support in place, up from 50% in 2021.

This rise in support is encouraging, but with UK savings levels lower than ever it raises the question: are employers approaching this challenge in the right way, and introducing the most effective forms of support?

Empathy gap

Since 2021, Wagestream’s State of Financial Wellbeing research programme has explored how financial wellbeing is experienced and understood within the context of the workplace. In our latest research, we sought to answer the questions: do higher earners understand the financial lives of lower earners and, when you extrapolate that to the workplace, what are the implications for the policy decisions that higher earners make on behalf of others?

To explore this, we asked participants who we classify as higher earners and lower earners ten questions about spending, saving, using financial products and how their money impacted their lives. We then asked each group to predict answers for the other group.

The most striking finding is the existence of an “empathy gap” between high and low earners – specifically higher earners persistently underestimating the financial savviness of lower earners.

The gap is particularly stark when we look at savings. Lower earners have a median savings balance of £3,000; for higher earners it’s £25,000.

When questioned about the savings of the other group, a perception gap emerges. Higher earners substantially underestimate the median savings for lower earners, predicting just £1,000.

Lower earners also underestimate the median savings for higher earners, although relatively their prediction is much closer at £10,000 vs actual savings of £25,000.

Lower earners accurately predict that higher earners spend more, accurately predict that they have more money at the end of the month and also that higher earners have over three times as much in savings.

So, while low earners made broadly accurate predictions as to how higher earners might spend and save, higher earners cannot fathom how lower earners are capable of logically managing tight budgets.

These findings should be taken as a call to action; to remember that your lived experience, your financial wellbeing, your experience of saving is likely to not be representative of the majority of workers if you are in the minority of earners. So how can employers create real action around savings? By taking the time to understand the financial exclusion faced by your people, by delivering financial products and tools that everyone can use, and by making them as easy to use as possible.

Read the full research here.