A New Trend in Payday: The Perks of Accelerated Pay
THE BIG THING I WANT YOU TO KNOW:
Accelerated pay allows you to access your already earned money at any point in the month instead of waiting for a designated payday. What’s the catch? Well… with freedom comes discipline.
ahh, yes. the best day of the month. payday!
there’s a new payment trend that allows you to choose your payday and it may be really helpful.
Payday loans are awful, we (hopefully) all can agree on that. But there’s a new trend among companies that lets you access your paycheck at any point in the month and its interest rate free!
Some people think it’s a great thing, some people are skeptical. Let’s dive into why, some general advice, and make it simple for you.
Let’s dive into accelerated pay and find out:
what is accelerated pay?
is accelerated pay a good idea for me?
and why it’s not black & white for everyone.
yes, it’s exactly what it sounds like...
accelerated pay allows you to access your already earned money in real-time instead of waiting for payday.
This is a relatively new practice and it looks a bit like those payday loans of old.
Payday loans have been outlawed in many states now, but back in the day you could get an advance on your paycheck, but then the interest rates were astronomical. Many people would get stuck in these payday loans because they couldn’t pay back the crazy interest rates. It was overall a very very terrible thing, but accelerated pay is different!
Accelerated pay is companies having the resources to “pay as you go” instead of just twice a month, with no interest rates attached. So if you need the money that you’ve already earned, you can get it in real-time instead of waiting until next Friday or however your company does it.
Over 10% of companies are offering this now. So the question is, is this a good idea??
With great freedom comes great responsibility and…
accelerated pay gives you more freedom
Cash flow struggles are real! If you don’t have that now, I bet you can remember a time you did.
Studies show 3/4’s of Americans live paycheck to paycheck. Especially when you’re starting out in your twenties and thirties, cash flow is super important. That’s the time when you should be building your foundation — your savings account.
The ability to access what you’ve earned in real time can be REALLY helpful.
But as with anything, it comes with a price. (Not a 400% interest rate like previous payday loans.)
Accelerated Pay programs are often transactional fees per payment or a monthly service cost. Cost can range between $2.00 - $8.00 and while small, can create bad habits if you’re not wise with your new found freedom.
it’s not black & white - Good or Bad
financial Freedom comes at a cost. *hint: it’s Discipline
Anytime you give freedom in any sort, you open the door for someone to abuse it.
I would use the same argument here that I use with credit cards:
If you know yourself, and you know that you’re going to abuse this and constantly pull the money out and spend it, then you need to put up boundaries around that.
Credit cards aren’t bad. It’s easy to say, “Never use credit cards. Always pay in cash.” That’s a really simple black & white answer, but the reality is that credit cards can be really helpful when used in a healthy way!
The same is true with accelerated pay.
The same is true with most healthy financial practices and how we see clients building wealth. It’s often not a budget issue, it’s a discipline issue, and you have to look within to truly evaluate how you are making progress towards your goals.
The most helpful thing is you and your habits
it’s your money. It’s your plan. It’s Your decision.
If you’re living paycheck to paycheck right now, explore if your company has this option. Especially because some companies are beginning to offer it as a perk and cover the cost! Now, this can really help with your cash flow, especially in that early stage of financial growth where cash flow is absolutely essential.
If you’re a business owner, think about offering this to your employees! Maybe it could be a catalyst to helping them build independence and reach their goals.
If somebody has the option to access their money from their paycheck whenever they want, I don’t think that’s such terrible thing. Actually, I think it’s a really good thing.
If your cash “flow” were a rapper could it drop a mixtape?