How to support younger workers during the cost of living crisis

Getting to grips with money has to be one of the most important life skills we can give our children and yet it’s still not generally part of the normal school curriculum; nearly 1 in 3 people weren’t taught about things like savings and pension in school.

So, a lot of us entered the real world of work and paying bills without knowing the basics. If the pandemic and the current cost of living crisis has shown us anything, it’s that we need to change this! We have to get people more financially resilient and the earlier we start educating them about money, the better – good financial habits formed when we are young are more likely to stick.

In terms of setting out how to approach this in the workplace, there’s no better way than sharing a real life case study – a project we’ve been working on with the University of Lincoln. We like to call it “Education in Action” as it’s very much a practical project with real positive financial outcomes for real young people!

I think it’s a great example of how to get young people comfortable with money and setting them up to be able to cope with financial challenges, like the cost of living crisis.

Tell me and I forget, teach me and I may remember, involve me and I learn...

The University of Lincoln, like most universities, has a cohort of students who hold down campus jobs; while they’re not studying, they’re regular employees carrying out a job of work and earning money.

Now this in itself is a great education opportunity; they get paid, receive a payslip, maybe pay tax and national insurance contributions, need to budget and pay some bills. It’s a step into the world of money before they graduate. It’s a great practical learning experience.

But how about getting to grips with saving?

From a remuneration point of view, the only difference between these young people and full-time employees is that they aren’t members of the University’s pension scheme as they don’t meet the auto enrolment criteria.

But being a progressive employer, the University didn’t want them to go without valuable and generous employer pension contributions or to lose out on one of the most important money lessons there is – how to save.

So, together we challenged the status quo and in effect auto enrolled the students (using what’s called contractual enrolment) into workplace savings. Just like a pension, they have the choice to opt-out and if they do ever meet the pensions auto enrolment regulations, they switch over into pension. Now it’s still early days but the initial results are amazing, and it shows how getting young people engaged with saving can really set the “money” tone for the rest of their lives.

Take a look at these two stats that say it all:

• Opt-out rate: Less than 10% (very similar to UK pension opt-out rates)
• Percentage of savers choosing their own investments: 82% (again much higher than the current UK rate where the majority remain in the default fund)

For every young person I meet, I learn an idea

This project has been a learning experience for us too. Not only are we learning the “language of youth” so that we can reach all young people easier with communications, but it’s leaped frogged into a solution to a problem that a lot of companies face – what do you about people who fall outside of the auto enrolment regulations? Swap pensions for workplace savings!

That way all employees are saving, they just happen to be saving into different products. But they’re all getting into that important habit of saving and they’re not losing out (through no fault of their own) on valuable employer contributions.

When dealing with younger people, it’s critical that we meet them where they are:

• Digital experience – this could not have been a successful project without tech delivery. Whether it’s the onboarding journey, communications or education, it has to be delivered through tech. Young people expect it.
• Ambassadors – Peers are more influential than anyone else. Right at the start of the project, we pulled together a group of ambassadors who could help us communicate with all students. With training, they’ve become “super users”.
• Speak their language – Again whether it’s about delivering communications or education, we need to speak in a way that’s understandable and relatable. A big part of this is getting rid of jargon!

If you see it as a two-way street, teaching young people about money can in turn teach us providers and employers about the future products/benefits we need to offer and how to communicate more effectively. After all, our young people are the future!