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Guest Post: How employers can give recent graduates a helping hand with their finances

People happy with board
Gareth Lillis

Living out during university can give young people a fantastic opportunity to learn how to manage their finances. So taking care of money matters should be a doddle once they’ve entered graduate employment. Right?

Wrong: today, graduates and young people in work have more financial worries than any other generation. Therefore, what a company can offer to provide a sense of financial wellbeing is more important to recent graduates than ever.

This post looks at some of the areas that concern graduates the most, and what employers can do to help.

Housing

Getting on the property ladder is more difficult for first time buyers now than ever before. The average house price stood at £230,630 in November 2018, a drastic rise from the average of £150,633 in January 2005. Fallen interest rates have also made saving for a deposit more difficult, and renting can be eye-wateringly expensive.

Recent research shows that 3.4 million young adults in the UK aged 20-34 are living with their parents compared to 2.4 million 20 years ago.

What an employer can do

A Salary Exchange (or “Salary Sacrifice”) is one way an employer can help their employees save. A Salary Exchange is when an employee accepts a lower salary, with the reduction being put into their pension. This means that the employer provides 100% of the pension contribution, saving the worker money on their National Insurance.

A workplace ISA is another (and usually free) money-saving option that employers can offer their workers. Employees don’t have to pay income tax on any money they make from an ISA, and won’t have to pay Capital Gains Tax on any income they make from selling their shares.

Loss of discounts and savings

Students in full-time education are eligible for numerous savings. Yet discounts on clothes, food, and services all disappear after graduation.

This may not sound like a huge hit to the wallet, but the money saved from discounts, especially on food and clothes, adds up over time: once the discount vanishes, so too does the potential to save.

What an employer can do

Employers can counter this loss by offering lifestyle benefits, which can provide discounts on the weekly food shop and retail therapy.

Offering a comprehensive lifestyle benefit package can make a company stand out as an employer, especially to recent graduates who will be excited to keep the discount privilege they enjoyed at university.

Lack of financial education

Aside from those with a finance-based degree, such as economics or accounting, most graduates have never had any formal education on finances. This lack of knowledge is not only detrimental to graduates’ financial decisions, but contributes to the financial worries that are damaging an increasing number of UK students’ mental wellbeing.

What an employer can do

Employers could offer workshops or seminars, or even enlist the help of a dedicated financial wellbeing organisation to provide employees with financial advice.

Graduates should look out for financial wellbeing benefits, such as workplace ISAs and salary deducted loans, and should ask what the company does to help its employees feel confident about their finances.

This post was written by Gareth Lillis, Marketing Executive at caboodle technology and edited by Grace Dillon, Content Writer at TalentPool.