Managing our personal finances is never easy. There are bills to pay, unexpected expenses and lives to live. Finding the balance between personal wellbeing and the integrity of our financial situation is often difficult, particularly when most employees are only paid once per month and the rest fortnightly (at best). Managing spread-out cash flow is challenging – here’s why this situation exists, as well as a practical solution all workplaces can implement.
The current damaging reality for millions of Australians
Australians do not have the best relationship with their finances. Whilst, on aggregate, the economy has rebounded strongly over the last six months as COVID-19 threats subside, personal finances are as out of whack as ever. As demonstrated by the hoarding mentality of many during the pandemic, a lot of us hold an irresponsible and erratic emotional link with our personal cash flow, finances and material wellbeing.
Almost six million Australians live paycheck to paycheck, and they all deal with it much the same way. Psychologically, people react to a cash windfall similar to a buffet. When the food is there, they eat it, with little regard to the later consequences. Payday comes around, and workers in this scenario get their monthly sugar hit – the ‘payday high’. They might be tempted to share the love, buying a round of drinks and behaving more financially generously than usual. Studies show that a shocking 20% of workers spend 50% of their paycheck within 48 hours. Of course, the reality of paying the month’s bills then hits, and after a few weeks, it’s a game of waiting for the next ‘hit.’
What happens when something unexpected happens? Whether it’s a medical issue, family expense or broken-down vehicle, unplanned costs present a severe problem for those who’ve already blown through their cash flow for the month. For a large portion of people in this situation, the solution is to use a credit card, use funds from important savings accounts or apply for a potentially dangerous payday loan only for the cycle to start again during their next pay cycle.
The healthier reality for Earned Wage Access (EWA) users
Earned Wage Access (EWA) allows employees to access their already-earned pay during any point in the pay cycle without having to wait until their next paycheck hits their account. When an unexpected bill or expense arrives, employees can alternatively access part of their earned wages in realtime to cover any cash shortfall instead of turning to new debt.
Instead of succumbing to the paycheck rush, financially empowered employees can instead take a flexible approach to budget during the month by matching expenses to available cash from their pay. Instead of waiting in anticipation of the next paycheck, EWA users may draw down the necessary funds to meet their outgoings, including unexpected costs that may occur at any time. It’s not a loan, so there is nothing to repay and most importantly with Paytime there is also never any interest to be repaid.
Paytime is not a miracle, but it is a healthy financial reality changing the lives of thousands of Australians every day. If you want to empower your employees to reduce their reliance on their next payday, contact Paytime today!