When thinking about workplace wellbeing, one factor that tends to be underestimated, or perhaps sometimes even overlooked, is financial planning. The concept of ‘workplace wellbeing’ itself first emerged in the early 20th century with the rise of industrialisation and concerns over the health and safety of workers. As the modern understanding of ‘workplace wellbeing’ began to take shape in the latter half of the 20th century, organisations recognised the link between employee satisfaction and productivity.

Fast forward to today, workplace wellbeing has morphed into a multidimensional concept that encompasses numerous factors such as mental health, work-life balance, personal development, employee engagement, positive workplace culture, etc. Among these diverse aspects, financial planning remains a critical yet underappreciated component.

Boosting your wellbeing through financial planning

Financial planning is about creating a roadmap for your financial journey. This involves assessing assets and liabilities, anticipating future financial needs and developing strategies to achieve financial goals. Whilst this may seem daunting at first, financial planning has the power to significantly contribute to workplace wellbeing by reducing stress and upping productivity. 

Worrying about money can take a toll on your mental wellbeing. Creating a roadmap to help better manage your finances and reach your financial goals contributes to reducing stress levels related to money issues as you feel more in control of your finances – ultimately delivering you peace of mind because you can answer these two fundamental questions: “Do I have enough?” and “Will it last?” By removing financial stress from the equation, you are less distracted at work and more productive – aligning the right conditions for career advancement and improved overall workplace wellbeing.

It’s worth speaking with your employer to see if your firm offers any sort of educational programmes designed to enhance employees’ financial literacy. These programmes aim to help employees feel empowered when making financial decisions by teaching them about the various financial tools available to them – contributing to their overall workplace wellbeing.

In the absence of such resources, and as appropriate, you could talk to your employer about their Group Pension Provider (which most are mandated to have), because these providers will sometimes have multiple tools that help employees to supplement their understanding. For instance, many will run “lunch and learn” events, often in conjunction with a Financial Planner.

In the meantime, there are simple steps you can take to help you get started on your journey to financial wellness.

Crafting your financial plan in 6 easy steps

Bearing in mind that everyone’s circumstances are different, here are six easy steps to help you get started with your financial plan:

  • Step 1 – Assess your financial situation by taking stock of your assets, income, expenses, and liabilities.
  • Step 2 – Create a budget by tracking your income and expenses. As a general rule of thumb for budgeting, you should follow the 50/30/20 approach, where 50% of your income is allocated to your essential needs, 30% to your wants (i.e. your discretionary spending, such as travel and treats) and 20% to your savings and debt payments.
  • Step 3 – Prepare for “what if” situations by making provisions for the unexpected. Most individuals will naturally think of their retirement as a long and healthy one – free from obligations and enjoying limitless ‘margaritas on the beach’. However, your plan should have the fundamental bedrock of Protection Planning, which is in essence optimising the effectiveness of your wealth to ensure you can overcome unfortunate circumstances affecting you, your partner, or your wider family (such as a health issue), and still live comfortably in retirement.
  • Step 4 – Confirm your employee benefits by speaking with your employer, as these will need to be taken into account in your financial plan. Many companies offer a good Employee Benefits program, that is tax efficient, where the high value items are Cash Benefits, like retirement contributions, profit sharing, etc. These differ from ‘Benefits in Kind’, i.e. non-cash benefits of monetary value that you receive in addition to your salary which are not tax efficient. For example, employers sometimes provide employees with a ‘Death In Service’ cover, which means they would offers a lump sum payment to your beneficiaries should you pass away while employed by the company – this is often subject to taxation. Other examples include company cars, housing allowances, etc.
  • Step 5 – Set your financial goals for the short- and long-term based on your current financial situation and future plans (buying a home, getting married, supporting your children, planning for retirement etc.). Your goals should take into account any outstanding debt (credit card debt, student loans, etc.) and include a plan to manage and reduce this over time.
  • Step 6 – Review your financial plan regularly and adjust it as needed based on changes in your life circumstances or financial situation.

Though the above will help you get started, it’s worth considering directly seeking professional guidance to help you build and maintain your financial plan over the long term.

Unleashing the powers of gifting in the workplace and at home

Gifting in the workplace can foster a sense of camaraderie and strengthen interpersonal relationships, whether through swapping small tokens of gratitude, recognizing significant milestones, launching a secret Santa, celebrating a co-worker’s birthday, etc. These acts of kindness can enhance the overall workplace morale and employees’ personal wellbeing. Again, consider speaking with your employer about introducing workplace rewards and recognition if your firm doesn’t already partake in these kinds of thoughtful gestures. Beyond the workplace, the powers of gifting can also be significant.

Making a personal monetary contribution to a cause close to your heart can also be a powerful way to elevate your overall wellbeing. Knowing that your actions have positively impacted someone’s life fosters positive emotions and enhances your sense of purpose and fulfilment. Research shows that generosity also fosters social connections, so engaging in acts of giving can augment feelings of belonging – an important factor for mental health.

Depending on the state of your finances, it may be worth considering planning your gift to ensure it doesn’t have unintended consequences on your own finances. More specifically, determining ahead of time when, how and how much you want to gift.

Planning your gift

Whilst this may seem a bit dry or perhaps even ‘calculated’, planning your gift in no way reduces the thoughtfulness of the gesture nor the positive impact it will have on the recipient. It’s simply a precaution worth considering.

  • How much: As a Chartered Financial Planner, I have witnessed first-hand how the cost-of-living crisis has affected many individuals’ finances, and continues to do so. However, regardless of your financial situation, your money has the power to do good, no matter the amount. Whilst it’s a personal choice, you should gift only what you can afford.
  • When: Looking at your budget, your donation would typically come from your discretionary pot. So, it’s worth considering making your gift when you already have a bit of a cushion in that pot. That’s why all good Financial Planners insist that their clients have a carefully calculated “rainy day” emergency fund.
  • How: There is no right or wrong way to gift – the decision of how you give your money and to whom is one that only you can make. One way of course is through charitable contributions, which are a well-known means of donating money in a tax-efficient manner because gifts to charities are exempt from inheritance tax (IHT) in the UK. As an example, Gift Aid involves gifting to a registered charity. This allows the charity of your choice to reclaim the basic rate of tax that you have already paid on your donation – meaning that a £1 donation is effectively worth £1.25 to the charity. Depending on your financial circumstances, charitable giving could be a wise choice as it holds the power to profoundly impact someone’s life while safeguarding your own financial stability from any adverse effects.

These are typically ’one-off’ gifts, however, I have been increasingly speaking with clients who wish to create a gifting legacy and are doing so via their own Charitable Foundation – contrary to common belief, this isn’t exclusive to millionaires. Setting up a gifting legacy can be done during or post-lifetime and can be directed to local charities that are close to the doner, both in location and belief. This is compounded by the funds being drip-fed over time, to have a long-lasting impact. Funds can also be collectively pooled. If this is something you wish to explore, consider reaching out to a Financial Planner who could help you build your gifting legacy.

Anthony Hardy, Kingswood Group
Anthony Hardy
Chartered Financial Planner at Kingswood Group

Anthony is a Chartered Financial Planner at Kingswood Group and a Chartered Fellow of the Chartered Institute for Securities & Investment. He has over 30 years’ experience in financial services, advising individuals and business owners on making financial decisions that fit their goals and aspirations.