Let’s talk about debt – Talk Money Week
It’s Talk Money Week, an annual event which encourages everyone around the country to talk about managing their money. And one area we can all fall short in, is managing debt. In our latest research*, when asked about employer initiatives, over 3 in 5 employees said debt and credit support would be useful or extremely useful in improving their financial wellbeing. On top of this, almost half of employees said they had nothing to fall back on at the end of the month, should a financial emergency occur; meaning many could turn to borrowing and credit. This highlights the importance of a good financial wellbeing and education programme for employees.
There are many types of debt from mortgages to car finance, credit cards and loans. Some debt is good and can help people eventually own a home or build up a good credit score. But when unable to pay debt off, it can lead to serious consequences. This Talk Money Week start by reminding your employees of the importance of paying off debt. And, for those who might be struggling to prioritise their debts or wondering whether they’ll even be able to pay them off at all, here are some initial steps they can take:
Write down exactly what debt they have
Quite often, until people have it right in front of them, they can be unaware of exactly how much debt they have. Encourage employees to take time to find out exactly what they owe, to who, how much interest they are paying and what the minimum payments are. This will allow them to prioritise debt and clear those that are costing the most.
Cut the cost of debt
There are ways your employees can cut down the cost of their debt through reviewing what debt they have. If they are paying high interest on credit cards, they should try looking for another one. Many credit card lenders offer special rates such as 0% interest for 12 months, when you transfer current credit card balances to them, and this can result in substantial savings.
Another way to help them save money on their debts is through debt consolidation. If they owe money to different lenders and through different products, consolidating debt can make it easier to manage. If employees are paying high interest on multiple products, consolidating it into one payment can help reduce their monthly outgoings.
Don’t take on further debt
It may be tempting for employees to use more credit cards or loans to help see them through until the next pay day. But this isn’t recommended and can make it more difficult to get out of debt in the future. Encourage your employees to steer clear of taking on any further debt, no matter how small it may be.
Get professional help
If your employees are struggling to pay off their debt or are failing to meet payment deadlines, then they must seek some professional debt advice. There are many free services available and highlighting these could provide your employees with the help they need to improve their mental and financial wellbeing.
Free services include:
No matter what debt your employees may have or how bad it may be, they do not need to go through it alone. Make sure you reach out to your employees about managing their debt and encourage them to take action as small changes can make a big difference.
If your employees are struggling with their finances and you would like to offer them financial support, Secondsight can help you implement steps to provide financial education in your business.
To find out more, get in touch today.
*All statistics were taking from the latest Secondsight research conducted in 2020. You can download a copy of the research paper here.
This article is for information purposes only and does not constitute advice or a personalised recommendation.
Late payment can cause you serious money problems. For help, go to moneyadviceservice.org.uk.
Article last reviewed 09/11/2020.