The new year brings a new start for people’s finances, giving the chance to re-evaluate the situation and make changes based on your priorities. This could begin with making a plan to pay off any outstanding debts that have been causing stress, or just being aware of changes that may impact your finances. Here, to help you with your finances this year, we’re sharing the key things you need to be aware of, and the three actions you should be taking.
The 2022 NI increase:
The prime minister has announced that national insurance (NI) will increase in April to help fund the health and social care sector.
This, for example, means an individual earning £30,000, with a net take home pay of £23,112, will see this take-home figure decrease by £255.
It is crucial to build healthy financial habits that will help minimise the impact once the NI hike takes place this year. It is also vital to understand that this change might create additional stress. Additional stress can cause a lack of productivity in the workplace and an increase in mental health difficulties.
How can HR help employees deal with the NI increase?
HR departments can play a vital role in supporting employees in navigating the NI increase.
One way in which they can do this is by sending reminders to staff about the increase, including information on what this may mean for them and giving them time to prepare and plan their finances. Investing in HR software such as CIPHR HR make this process quicker and more efficient, by streamlining and automating regular communications to employees.
As well as providing employees with crucial information about the increase, HR should have an open-door policy for worried employees to voice their concerns and receive support.
How to improve your finances:
While it’s important to keep up with government changes, it’s also crucial that you take action when needed to really improve your finances. This action can include:
Save towards an emergency fund
Saving an emergency fund is a great way to ensure you are prepared if an unexpected cost arises. Even contributing a small amount each month to the fund can provide you with a backup in the event of an emergency. HR departments can support employees in saving towards an emergency fund by encouraging the use of apps such as Mintago, which help people to save easily and take charge of their finances without hassle. Moreover, apps like this can improve employees’ finances by offering savings on eating out, travel and other expenses.
By providing benefits that will support employees’ savings, HR departments can encourage employees to develop good saving habits. For example, by providing remote working incentives, research suggests that employees can save approximately £500 a month by working from home.
Hunt down lost pension pots
Research shows that most people have approximately 11 different employers throughout their working lives. This equates to a lot of different pension pots – in fact there are around £20 billion in unclaimed pots in the UK.
Some employers will offer benefits such as Mintago, which allows employees to track down lost pensions on your behalf. HR could also support in reading a payslip correctly, ensuring that you understand how much both you and the employer are currently contributing to your pension. This will allow you to be informed when making any contribution changes in the future.
Set short and long-term financial goals
Start setting short and long-term financial goals that are SMART (specific, measurable, achievable, realistic, and timely). For example, a short-term goal could be buying a more up-to-date computer, while a long-term goal could be paying off a large debt.
Every employee’s situation is different and should be treated as such. What works for one person financially may not work for another. HR departments should offer support that suits different employees and their needs, therefore increasing employees’ financial wellbeing.
This blog post is outside the Mintago Blog