First-time savers: How to get them started
At a time where costs are rising and many must dig deeper to cover bills and expenses, saving money can fall by the wayside. Lacking savings can be problematic at the best of times, but it becomes catastrophic at times of increased financial anxiety.
Given that we are collectively facing one of the largest financial shocks of the last century, with 78% of UK employees worrying most about having no savings or encountering unexpected costs, it is crucial that employees are encouraged to protect themselves.
Employers can play a critical role in supporting their employees with saving, and one of the most impactful ways to do this is by launching a savings campaign within your organisation.
Here are four key principles to guide your campaign.
1. Know your people
Anyone who has witnessed England trying to win the world cup in the last 50 years knows that there is nothing more dispriting than being set a goal that is inherently out-of-reach. Every organisation is made up of an array of entirely unique individuals, and therefore their finances are also totally unique.
A savings structure that works for an unmarried, salaried employee, does not work for a zero-hours employee with three young children. Therefore, you should take care to ensure that you have (as far as possible) a realistic awareness of your employee base: income, dependents, financial obligations, and so on, in order to pitch savings content universally and representatively.
2. Focus on building savings behaviour
Starting to save can be difficult – especially for those who have never done it. Savings campaigns should ignite a lasting commitment to saving, rather than set concrete parameters where some individuals, perhaps those who are attempting it for the first time, could fall at the first hurdle.
Many of us are familiar with the NHS’s Couch to 5k running programme, and the premise is the same here. To build up a lasting behaviour requires incremental and manageable steps.
Research carried out by Nest Insight reports that even if savings are dipped into to cover unforeseen expenses or smooth out income, the general trend is still upwards, proving the value of flexibility in the modern financial climate.
This flexibility is reflected in the increasing popularity of microsavings and automated savings, encapsulated by a universal ‘roundup’ feature (much like Wagestream’s ‘Save the Pennies’ tool), where any expenditure is automatically rounded up to the nearest pound, with the spare change going into a savings pot.
It’s crucial for business leaders to introduce a savings campaign that allows for flexibility. Why? Because the course of first-time saving never did run smooth, and flexible tools are the universal equaliser.
3. Start specific
Research conducted by the University of Bristol separates savers from low-income backgrounds into two categories: rainy day savers and instrumental savers.
The former are committed, generic savers, a practice which has most likely been instilled in them from a young age; the latter (a much larger group), find it difficult to save without a specific and tangible goal in mind, a holiday for instance.
Whilst the ultimate goal for employers should be to encourage the rainy day saving style: general, unallocated savings to fall back on in times of financial crisis, starting with the tangible and concrete goal of instrumental saving can be an effective way of easing people into savings habits, and cultivate a sense of palpable achievement associated with saving money.
Employers can utilise this method of instrumental saving as a more urgent call to action for their employees, and to give more direction to their savings campaign. For example, launching in the lead up to the summer holidays or Christmas could be far more likely to jolt employees into action.
4. Make it worth it
When employees are incentivised to reach a goal, performance increases by 27%. How would this work with savings? Here are some examples:
- A monthly prize draw where a small number of savers get a prize.
- Those who are still saving after a year get their savings topped up by 5%.
- Everyone who reaches a pre-agreed savings goal by year end gets a bonus day off.
Regardless of the magnitude and significance of the incentive, the principle remains the same, incentives engage participants.