Posted / June 12, 2020
By James Malia, Sales Director
If you asked someone who rarely exercised to run 5km, they would likely tell you to “jog on”.
You’d likely get a better response if you help them to realise the benefits and set small achievable goals, building them up more slowly, asking them first to walk a short distance, then a slightly longer distance, then to complete a short run. It’s about showing them a meaningful end goal, and a path of progress in conquerable steps.
There’s a lesson here for any employer that cares about the financial wellbeing of their workforce – in fact, there are several. So let’s look at the five lessons the ‘Couch to 5k Challenge’ can teach us about personal finances.
🏃♀️ Lesson one: take small, incremental steps
We’ve already started this one so I’ll just complete the comparison: if you told someone with no money they’d need to save £5k, it would look unaffordable.
But if you could show them little ways that they could build up to that £5k and got them to believe in how it could help them within a realistic timeframe, you’d get the same effect as the couch to 5k.
🚫 Lesson two: break bad habits
A ‘Couch to 5k’ will often involve eating healthily, which usually involves abstention. Similarly, a financial plan means thinking about what we can cut out. The current global health crisis, for all the worries and tragedies it has brought with it, has presented a unique opportunity for us to cut out the unnecessary items.
That’s because we’ve learnt to cope without certain things over the 12 weeks of lockdown, shopping more for ‘needs’ than for ‘wants’.
Now is the time to be asking ourselves what could we continue to cope without after lockdown? After all, we’ve already done the hard work.
One expert, psychologist Dr Maxwell Maltz, famously claimed it took “21 days to break a habit”. Whether this is true or not, it’s certainly possible we’ve ditched some spending habits over those 12 weeks.
We all know someone who has gone on a diet successfully, but when they return to normal eating habits they over indulge, and almost end up worse off than they were before. Again, controlled spending as we exit lockdown, and having support to encourage you can help reduce the risk of this happening.
⏱ Lesson three: plan early
It’s not wise to wait for a health issue before we make lifestyle changes. Same with our finances – a plan is needed from the get-go . When you make a fitness plan, you usually start by weighing yourself. The financial weigh-in involves looking at your current incomings and outgoings.
Next, look at what you can change…and remember: take baby steps. Is it necessary to have four pints after work on a Friday or could you cope with two? Do you really need Amazon Prime, Satellite TV, and Netflix?
Never cut too quickly. If you were consuming 15 spoons of sugar a day and you went suddenly to nothing, your body would scream out for it and you’d abandon the health kick. It’s the same with trimming your budget.
🏆 Lesson four: know your goals – and view them as rewards
Our health and fitness plans usually have a purpose, even if we don’t write it down. This could be to just feel more healthy, or maybe to have more energy, to feel more alert, or be more productive at work.
The same should apply in our finances: the incremental steps we take to improve our bank balances should be linked to the real goals – like arranging a wedding, taking the family on holiday or moving house.
This also helps us avoid squandering the self-improvement we make on our journey to financial fitness. This lesson is particularly urgent for people who are currently furloughed or on less pay because their employer, business or freelancing has suffered in the pandemic.
For many, that lost income will eventually return and, having gotten into the habit of spending less, it will feel like a pay rise. We should already know what that money is for to avoid using it to slip back into bad habits.
💪 Lesson five: you are the personal trainer
As employers, advisers or mentors, our task is to get your people thinking about their goals, their plan, their strategy. That then frames their personal financial management in terms of targets, incremental steps and rewards in a set timeframe. No one wants a mortgage – they want a home, they don’t want to hide £100 a month away – they want a holiday, they don’t want to pay into a pension – they want to retire at the right time on the right money.
Understanding these ambitions and coaching them to help them achieve them by being better with money is key, especially when pay rises are probably on hold for the foreseeable in many organisations.
Employees are more likely to trust their employer to help them gain control over their personal financial situation than a financial adviser. This is your opportunity. Whether it means your managers talking to their teams, or bringing in expert support, or just giving your staff the tools to improve their situations – you will have to decide. Don’t expect them to simply read a website and change. Reading doesn’t get you fit – making positive change does.
What’s sure is that having a good view of the current situation, a set of goals and rewards, and a journey of baby steps towards them, will get your people coming to work with purpose. And when people have a purpose at work, they have even more reason to perform.
James is Sales Director at MyEva, the digital financial adviser for workplaces. MyEva helps employees improve their financial situation with independent personalised guidance and advice.