Most of you will have heard at least some references to the cost of living crisis, but you may not know precisely what is meant by the cost of living crisis.

The cost of living crisis refers to the fall in what we call ‘real’ incomes – the actual spending power you have once your household income has been adjusted for inflation and tax. Since late 2021, the combination of high inflation and tax increases has meant a decrease in our spending power as wages aren’t keeping up with inflation. We take a pay decrease when we accept pay increases below the inflation rate.

Although the government has stepped in to try and soften the blow for households, the fact is that prices are rising fast, and our income isn’t keeping up. Prices and inflation aren’t expected to drop any time soon.

Running a car, heating a household, and feeding a family are becoming more expensive, and we see a squeeze in the spending money available after paying all our bills. This squeeze hits everyone, but it disproportionately impacts those in low-paid work – for example, lower-income households spend a more significant proportion of their income on fixed costs like energy.

Research shows that 39% of adults – 20.3 million people – don’t feel confident managing their money. It’s a rather startling fact. Working in the finance industry doesn’t mean we all have the skills or can even find the time to budget.

Budgeting doesn’t simply mean penny-pinching and spending less; it means having a financial plan that allows you to live, work and do the things you enjoy, all while sticking to your spending means. In short, it means taking the time to ensure you don’t spend more than you have available or can afford. Budgeting is also valuable for setting out and visualising your progress towards short-term and long-term spending goals.- This could be for a significant purchase, buying that new pair of jeans you want, or having enough money to get through a month without reaching a credit line.

Budgeting is a valuable tool for all of us – you never know when an unexpected cost will land in your lap. Here are some signs that you should start budgeting now:

• You struggle to pay your bills, or you put off paying important ones
• You need to take out credit or rely on payday loans to help make ends meet until your next pay comes through
• You’re making purchases that you know you don’t have the money to pay for – you leave it for another day to worry about
• Money is on your mind, or you wake up mulling over your concerns
• It’s affecting your sleep, relationships or work

Here are some of the common signs that you may need financial help:

• Refusal of credit
• Using payday loans to make ends meet before your next payday
• Only ever paying the interest on your credit card
• Declined card transactions & maxing out on your credit limits
• Using your overdraft regularly to make everyday purchases such as food or expected monthly bills
• Defaulting on rent or mortgage payments
• Your regular home expenses always add up to more than you earn

Reasons for financial difficulties

Financial problems can arise from many different circumstances. It could be a short-term shock due to an unexpected expense, a specific event, or something that develops slowly over time. Whatever the cause, it’s essential to spot the signs of difficulty and to act as soon as you identify a problem. These are just a few of the everyday events that can lead to financial challenges:

• Separation or divorce
• Changes in family circumstances such as remarriage, a new baby, reducing hours at work, loss of partner’s income, carer responsibilities, an extended new family
• Moving home – not only is it stressful, but it’s also costly. This can be even more challenging when it’s because of a relationship breakdown, or you’re otherwise being forced to move (such as a landlord selling their property)
• An unexpected expense – when you’re working hard to make ends meet, it can be challenging to save for the unexpected payment – like your washing machine packing up.
• Illness and longer-term health problems
• Bereavement
• Addictions or gambling – these problems don’t go away on their own and need professional assistance to tackle
• Significant increases in daily costs without an increase in income.

Talking about financial problems

It’s important to talk openly to your employer about your financial situation, primarily if you work for a Bank.   If you can’t speak to your manager, could you talk to a senior manager? If you struggle, speak to us. We can signpost support and perhaps assist with your concerns about speaking up.

Banks must demonstrate financial integrity to the Regulators so customers trust the business and its staff.

Whilst everyone has a responsibility to look after their finances, there’s no judgement on you if you find it challenging to make ends meet – there’s lots of help available to get things back on track and stay in control.

Your employer accepts that situations outside of your control may contribute to financial difficulties – including addictions – and you should always be treated with empathy when you make a disclosure. The bank’s focus will be on maintaining employment.

Financial difficulty & work

We’re often asked if being in financial difficulty means losing your job. You may face potential disciplinary proceedings if you’re not honest about your circumstances if things have escalated, where there’s suspected fraud or theft, or if there’s been a breach of security or other policy. In short, being in debt doesn’t mean you’ll lose your job.

If your role includes giving financial advice, your employer must also assess potential risks under schemes such as the Senior Managers Certification Regime.

Anything you share with your employer should be treated sensitively, confidentially and with discretion.

The most important message we can give you is to talk. Don’t stay silent if you’re struggling. Your employer and others can help. Please don’t leave it until it’s too late.

All about credit reports

As we’ve explored elsewhere in this guidance, it’s important to talk openly with your employer about your financial situation, especially when it’s a bank.

Employers in the finance industry can conduct credit checks to ensure your fitness to undertake your role. Checking your status is especially important, where your role entails giving financial advice or having access to sensitive customer data. The bank must ensure that colleagues don’t represent a risk to themselves, customers or the wider business.

When to get a credit report

Regardless of whether you’re having financial problems or not, it’s essential in this digital age to keep a check on your credit reference – it’s the gateway into your financial well-being and a prime target for mischievous fraudsters.

The good news is that it’s never been easier to stay on top of your credit report and to be notified when there is any change – and you don’t have to go too far to access this information either!

Younger credit referencing agencies have been giving free access to credit reports for some time, and now traditional credit referencing agencies are catching up. The banks, not to be outdone, have also recognised the importance of giving you access to this information.

We won’t recommend which credit referencing agency you should use. Still, you can find helpful information on the Money Saving Expert website that gives you more detail about free credit reports.

It’s recommended you have regular access to your credit report.

When to disclose information to your employer

You don’t need to disclose the contents of your credit report to your employer regularly, but there are times when you need to have that conversation with your manager. We recommend discussing financial difficulties with your manager before they become a problem and you reach your credit report.

You’ll need to let your manager know:

• If you default on any loans, credit cards, mortgages or any other form of credit
• When there is a County Court Judgement (CCJ) filed against you
• You file for bankruptcy.

A single parent who couldn’t afford increased fuel costs. She had debts and was waiting on child maintenance payments on a low income. The landlord raised her rent, and even with benefits, she couldn’t afford to pay. The Fund provided £1,500 for general living expenses, getting her back on track. BWC also signposted her to get more help with her utility bills and additional support for her children.

A client with long-term health conditions. On a low income, she could not pay for much-needed adjustments to keep her independence and was finding it hard to pay her bills. The Fund provided a grant for a new radiator, and its installation, a freezer and an adjustable bed and BWC were able to arrange a care needs assessment, resulting in ongoing care.

A client with a young child who had fled domestic abuse. She was on a low income, had legal costs, and had a lot of debt. The Fund provided a rental deposit, one month’s rent, a laptop, cooker, fridge freezer and a bed, totalling £3,000. BWC also signposted her to other charities and statutory support for further grants towards household essentials.

A client in debt. The client’s husband was self-employed, but lockdown had reduced his earnings. Unable to afford unexpected costs to fix their home, they became debt. They were recommended an Individual Voluntary Arrangement (IVA) but couldn’t go ahead as the client worked in a regulated role. The Fund provided a grant of £1,000 towards general living expenses helping the family get back on track and clear some of their arrears.

Support & contacts

There are many sources of support available to you:

• Santander’s Employee Assistance Program: 0800 032 3720
• Bank Workers Charity: 0800 0234 834 — https://www.bwcharity.org.uk/

Mental health support

• Mind mental health charity: https://www.mind.org.uk/
• Samaritans: 116 123 — https://www.samaritans.org/
• NHS Every mind matters

And remember, if you’re an Advance union member and need a chat about support at work, call the helpline in complete confidence on 01442 891122

• The Bank Workers Charity provides a budgeting planner that you may find useful
• Take the financial resilience check to see how you would cope with sudden economic shocks
• Citizens Advice offer an online budgeting tool with handy tips
• Find out about managing increasing energy costs

43% of workers say that being in debt makes it difficult to concentrate at work. And more than 16% of UK adults have debt problems.

Don’t worry or struggle alone. Confidential expert guidance is available to help you with budgeting, managing creditors and debt management plans.

• Get help with debt management through the Bank Workers Charity and its partners.
• The Bank Workers Charity guides on  debt management
•  Step change is a debt charity that can help you take control of your finances and get you back on track, offering free debt advice online and by phone. We’d recommend talking to the Bank Workers Charity, as they work in conjunction with Step Change, giving you extra benefits
• Check if you may be entitled to state benefits
• Your employer’s employee assistance programme can support you too.

Support contacts

• Santander’s Employee Assitance programme: 0800 032 3720
• Bank Workers Charity: 0800 0234 834 or https://www.bwcharity.org.uk/

Knowing when to start looking at state benefits or financial grants can be tricky. That’s why the Bank Workers Charity and others have put guidance together to help you organise things.

Benefits

• The Bank Workers Charity offer tools to help establish what you may be entitled to from the state benefits system
• Citizens’ advice offers guidance and support, including partners that can help you work out what benefits you might be entitled to
• Santander’s employee assistance programme can support you too on 0800 032 3720

Financial grants

• Check what grant schemes and other benefits are offered by most energy companies, charities and the government. They may provide support to help with energy bills, for example, but even if they can’t, they’ll be able to help you manage any debt with them.
• The Bank Workers Charity can provide you with guidance on your options and operate a one-off cash grant scheme, subject to eligibility, including helping towards the payment of energy bills up to £500
• Ask Bill is designed to provide free and impartial advice to help you save money on your energy and water bills – they offer tips on how to reduce your utility bills, manage your money and deal with debt issues.