As inflation hits a 40-year high and the cost-of-living crisis deepens, a ground-breaking new report has revealed an apparent –and timely – link between confidence with numbers (numeracy) and mental health and financial wellbeing.
The study, which is based on 2,010 online interviews with employees across the UK and Ireland has found that just under three quarters (73%) have become more worried about their finances than they were prior to the pandemic.
But it also revealed that a mere one in seven (14%) felt very confident about their ability to use numbers in either a workplace context or in their everyday lives. Even fewer women (11%) express full confidence in their ability to understand numbers than men(19%), but it remains a minority.
A huge 46%said they lacked confidence in their numerical ability. Their biggest challenges related to tackling measurement and conversions (44%), fractions (43%) and percentages (25%). These findings have big implications for employers of every kind –especially if they recognise the need to offer more support, clarity and guidance to their employees in worsening economic conditions.
The link between numerical confidence and financial engagement
The lower an individual’s confidence levels, the less likely they were to feel productive (42%)and self-assured (40%) at work. They also felt less engaged with their personal finances, often because they were unable to understand financial information and use it to make decisions.
Employees who were less confident in their numeracy skills said they were less likely to check their payslip every month, and that doing so makes them feel uneasy and worried about their finances. Key problems were revealed to be the widespread use of acronyms and potentially obscure financial terms despite being critical to understanding how their pay has been calculated.
Over a third (38%) have said they were not convinced they understood their payslip, with the figure rising to 55% among people with lower levels of numeracy.
They don’t know if they’re being paid the right amount and they’re not putting any value on the wider benefits and pensions they’re getting from their employer. “This is a real problem.Gethin Nadin – Zellis’ Chief Innovation Officer
Ultimately, this situation can have a serious impact on mental and physical health, leading to anxiety and depression at a time when post-lockdown burnout levels are already high. As many as 24% of people with low levels of confidence in their numerical ability suggested that these anxieties have a direct impact on their mental health.
The link between financial wellbeing and mental health
These anxieties are being highlighted as financial pressures make understanding and planning around pay much more sensitive and critical.
Over half (51%) have said that a mistake with their pay, such as being paid late or the wrong amount,would cause them stress and anxiety, and 50% say it would lead to financial difficulties, such as not being able to pay the rent or other bills. Uncertainty on whether a payslip was accurate would have a detrimental impact on over a third of all employees (36%), while 31% would struggle with the process of addressing payroll errors with their employer. As Gethin points out:
“Financial wellbeing is often overlooked within the wider wellbeing agenda. Employers aren’t recognising the cyclical relationship between money and mental health.”
As to what employers can do to help employees better understand their finances and help to build their financial resilience, meanwhile, the report recommends several approaches using payroll as a jumping-off point:
- Implement an accessible and inclusive payroll strategy: Identify and understand the challenges that employees, especially those from vulnerable communities,are facing in order to address them effectively. Possible approaches here include education, counselling, hardship loans or pay advances.
- Encourage open discussion: Provide safe and discrete channels for employees to discuss and ask questions about their payslips and financial situation so they can access the support they require.
- Use plain English: Simplify terms, clarify acronyms and present payslip information in as straightforward and concise way as possible.
- Ensure your payroll is accurate: Find ways to reduce errors, for example, by automating manual processes.
- Provide access to appropriate technology: Self-service applications and just-in-time information make it easier for employees to check their payslips and find out what they need to know.
You can download the report in full here.
If you would like to speak to Zellis further about any of the material in this research, please don’t hesitate to reach out.