Why You Should Consider Payroll Deduction
The cost-of-living crisis is causing fear in many households, with around 3 in 4 adults feeling very or somewhat worried about the rising cost of living according to ONS reports. People with young children and those in the lower salary ranges were found to be the most concerned about the rising costs.
Money worries can be a large contributor to mental health issues and the Royal College of Physicians recently reported that more than half of the people they surveyed about the impact of the rising cost of living said that it had negatively impacted their health.
The Deadline to Breadline Research conducted by Legal and General claims that the average household is just 24 days away from the breadline, rather than the 90 days that they believe.
As an employer, there are many negative consequences when your employees are worried about money problems. Protecting your employees’ mental health and wellbeing is obviously a top priority as an employer but there are also factors that can impact your business.
Employees who are worrying about money management can get distracted from their work, leading to lower productivity, or even making errors that could become costly issues for your business.
Supporting your employees during this worrying time will not only help make their lives easier, but it will also help them to feel more engaged in work, without money worries playing in the back of their minds. There is also a vicious circle in terms of progression, as employees who are pre-occupied with financial burdens are less likely to focus on progressing their career to gain promotion, which in turn keeps their income at a lower level.
There are numerous ways to support employees, such as having an employee support programme with financial wellbeing advice included. Regular mental health check-ins with a line manager are also important to try and identify any issues early and establish where support can be provided.
Another solution is to register for a credit union payroll deduction scheme, which enables employees to access lower interest loans that they may otherwise not be able to obtain due to adverse credit history.
You might be thinking ‘why would we want employees to take out loans and get into debt?’ The simple answer is that a credit union loan is usually the best available option for the financial future of the loanee.
Instead of missing payments on energy bills or mortgages, a credit union loan is a short-term bridge that is easier for loanees to manage rather than falling into minimum payment traps on credit cards or taking out high-interest loans that take decades to pay back.
How credit union payroll deduction supports a healthier financial future
The main benefit of a payroll deduction scheme is that the loan repayment goes out of the monthly pay, rather than the loanee’s bank account, so it is easier to budget money for the rest of the month compared to having a separate loan repayment going out of their account later in the month.
Credit unions are not-for-profit organisations that work in the best interests of members and customers, rather than trying to make profits from them, the way that standard bank loans or credit cards with high-interest rates work.
Using a regulated credit union loan will help prevent employees from seeking unregulated or high-interest loans from payday loan companies, loan sharks, and other desperate measures that will lead to spiralling debt that takes even more of a toll on their mental health and finances.
Many people who take out a credit union loan opt to start saving at the same time, so when the loan is repaid, there is a sum of money saved and ready to use in an emergency or to pay off some debt.