Amongst the fun and games of political party conference season, I was struck the other week by an interesting and inspiring new Labour party proposal. You may have heard, the idea is to bring credit card companies in line with payday loan providers, in terms of the overall amount of interest they can charge. The premise; no one should ever pay more in interest than they originally borrowed. Good. Fantastic. Hallelujah! Although, I should probably calm down because it’s just a proposal, and Labour aren’t even in power. Perhaps we’ll get lucky and the current government will ‘borrow’ the idea!
I speak to many people during our financial wellbeing sessions that this would affect hugely. To give you some idea of how prominent personal debt levels now are, here are some recent stats:
So, it is highly likely that you have employees who are struggling with debt, and possibly to a level that causes them significant stress.
To me, there are three main categories of debt:
The key is to keep borrowing under control. If you’re in debt, be in ‘good debt’; move away from ‘bad debt’, and always stay well clear of ‘mad debt’!
Of course, it’s easy to simply say that we must all take personal responsibility for managing our finances and keeping borrowing within sensible limits. In reality, we live in a society of high living and studying costs, and low / stagnated wage inflation, so it is no surprise that the population as a whole is struggling with debt. It therefore naturally follows that both the government and employers have a role to play in helping to stabilise this situation.
It’s great news that politicians want to keep financial credit companies under a tighter leash, but employers can also take steps to help their workforce. A good financial wellbeing session can help employees understand how to:
By providing your people with access to good quality financial education, you may help them to get out of a bad (or mad!) debt situation – or keep them out of such circumstances altogether.
This article was first published with REBA on 17 October 2017.