Four money fundamentals to help employees manage cost of living increases!

We spoke to our coaches and wealth managers at Brewin Dolphin to get their top 4 recommendations for your employees!

Cost of living increases are affecting everyone, regardless of salary or wealth. There’s no ‘one-size-fits-all’ when it comes to financial help – especially when there are external factors at play like inflation and rising interest rates. Everyone will feel the impact differently based on their individual circumstances, mindset, and life goals. 

But there are some tried and tested money fundamentals every one of your employees should be considering to build their financial health and resilience through the current economic uncertainty. 

Simple Budgeting Techniques  

Sometimes it really is as simple as making sure people are aware of how to balance their income and outgoings. 

Building a budget is the first place all of us should start. Most people will have access to simple tools to help them review their outgoings more regularly via a banking or savings app. But often it’s not something people have a good handle on. 

Emma Cowley, an investment manager at Brewin Dolphin says: “The first step to creating a sustainable approach to spending and saving is just being aware of where your money is going every month. The second is to make sure that any new budgets are realistic. If you’re feeling under pressure the temptation might be to eliminate all unnecessary spending. But making sure little luxuries are built in and some joyful spending remains will help you stick to it longer.” 

Our coaches also recommend avoiding an overly restrictive approach to budget. It’s important to focus on giving ourselves space in our budget for small luxuries and treats and stuff we enjoy, so we’re not solely focused on what we have to cut. This is especially true at the moment larger life goals might be put on hold because of the impact of inflation or rising interest rates. 

Emergency Savings 

As a general rule, our coaches recommend having a minimum of three months’ salary in emergency savings. But still, only 20% of employees we work with are actively looking to save. They typically have other priorities for their money. But emergency funds are one of the single biggest contributors to financial resilience. 

While day-to-day costs are increasing, the inclination to save ‘for a rainy day’ might feel counterintuitive. And it can feel daunting when you’re starting from 0 (and have other things to save for) but starting very small and building from there is better than never starting at all! 

Short, medium and long-term goals 

There is a lot of uncertainty about how long we’ll be feeling the effects of inflation and interest rate rises. And that uncertainty can make it hard to plan, feel in control or accept shifts to your life goals. 

But a key part of financial resilience is being able to prioritise your goals, and that means being clear on the short, medium or long term trade-offs you might need to make. Breaking your goals down into stages will help you get clear on what behaviours you might need to change, and for how long.

Emma Cowley, an investment manager at Brewin Dolphin says: “There are no hard and fast rules about what works best, so it’s important to keep your money mindset flexible. There will be some months where you might exceed your budget, or not hit your savings target. Life isn’t always predictable! So you need to allow your plans and goals to evolve as things change. But working towards something will help to make sure you’re making progress, even if it’s not perfect.

The Right Support 

Money is complicated. And the advice available can sometimes seem inaccessible and complex. But knowledge is power, and the more you know the better able you’ll be to make money decisions that are right for you and your circumstances. We also know from our research, having someone to talk to about money is the number one thing that helps people feel better about their financial future. 

Now, more than ever, it’s important to be honest about what you don’t understand – rather than put your head in the sand and hope it’ll go away. 

Emma Cowley, from Brewin Dolphin says: “The biggest red herring we see is the assumption that financial advice is too expensive, or not available to everyone. But that doesn’t need to be the case. Talking about money is one of the most important ways to improve your financial health and knowledge.” 

Sam Spurrell, VP Coaching at Octopus Money says: “Our research shows that 89% of people want someone to talk to about money, and it’s the number one thing that helps people feel better about their financial future. Financial education and 1-to-1 financial coaching also consistently rank highest as most wanted financial benefits.”

Monthly insights for people leaders

Thought-provoking perspectives and trends from our team of consultants and coaches.

Octopus Money Limited is an appointed representative of Octopus Investments Limited which is authorised and regulated in the UK by the Financial Conduct Authority. Registered office: 33 Holborn, London EC1N 2HT. Registered in England & Wales under No. 14069098.

Octopus Money is a trading name of TW11 Wealth Management Limited. Registered in England and Wales (No. 10339119). Authorised and regulated by the Financial Conduct Authority. Our Financial Services Register number is 763630.

As with all investing, your capital is at risk. If you choose to invest with Octopus Money, the value of your investments can go down as well as up and you may get back less than you invest.