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Don’t forget to prune your assets

I was doing the gardening this weekend; mowing the lawn (again), trimming the hedge (again), and pruning my roses (again). Gardening often feels like a never-ending task, and somewhat mind-numbing at times. Although during the mindless chores, you are given the head space to think about what else you should be doing – ‘I must get on some comparison websites, my car insurance is up for renewal’, ‘I must check my credit card deal, the 0% for 12 months ends soon’, ‘I must check that savings account, there must be a higher rate out there’ etc.

People always say, ‘look after the pennies, and the pounds will look after themselves’.

To all intents and purposes, I whole-heartedly agree with this. By making little savings in a lot places in your life, you can make a big difference to your finances. How many insurance products do we all have? How many utility bills do we all need to pay? Broadly, lots, and if you do a bit of research on all their renewals, you can generally make some good savings (or not lose out by as much as you might have done, had you stayed with a current provider).

What’s the point?

Well it depends on your current financial situation. For some people who aren’t set up so well, making small savings here and there could mean paying off debts quicker. For other people not in debt, it provides more scope for expanding investments – paying into a savings account regularly, increasing pensions payments to where they perhaps should be, or setting up a Junior ISA (Individual Savings Account) for a son or daughter.

Why should employers care about this?

A stressed employee is a less productive employee. What’s one guaranteed way to add stress to your life – have debt you are not in control of. People with financial worries concentrate on their work less, are more distracted, suffer physiological or psychological symptoms, and are more likely to suffer from depression (potentially resulting in absence from work).

People in control of their own finances, with less debt, and a savings buffer are significantly less likely to be stressed and more productive at work. Those saving towards a specific goal, that is likely to generate a positive outcome (such as moving up the property ladder), are also more likely to want to be at work and working hard!

Is this an issue now, the credit crunch was ten years ago?

Actually yes. The investment company UBS uses a tracking indicator called a ‘credit impulse’, which monitors changes in credit volume. When it drops dramatically, it is essentially telling us we’re not in a great place economically! Results from the summer in 2017, apparently suggest that we’re not far off the global credit pattern that existed just prior to the 2007 credit crunch, and UK debt levels are forecast to surpass 2007 levels in 2018- so yes it does matter.

What should employers be doing?

Regardless of any potential downturn in the economy, if UK debt levels are currently very high, it’s likely some of your employees are in debt. This means they could be experiencing the negative side effects discussed above, and their productivity could subsequently be diminished. As an employer, you’re in the perfect position to help, by running more financial education programmes. Give your staff the knowledge to help themselves – help them manage debt and increase their saving levels and they will be happier, more productive people.

Getting back to my gardening, why do I bother ‘deadheading’ lots of little roses? Because they will bloom again and continue to make my garden beautiful!

This article was originally published on the REBA website – 23 August 2017

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