Accessing your earned salary on a daily basis can harm you financially.
- Same-day pay can be expensive, but free options exist.
- If you spend your money the way you make it, you might lack the funds for rent or other big expenses.
When you’re in dire need of cash and you’re running low on cash, payday can feel like an eternity. You may be wondering (rightly) whether it makes sense to let someone else sit on the money you’ve already earned, especially when you need it today. This is where the daily paycheck comes in. Before you tap an app to transfer today’s wages to your bank account, consider the potential downsides of same-day wages.
1. Daily allowance can be expensive
Many daily payment platforms charge a fee if you access your money before payday. Try to avoid spending money to get your wages as much as possible. If you run out of cash between paydays, those extra few bucks are better off in your pocket and not on the app. A few bucks doesn’t seem like much, but the fees add up.
Depending on how often you access the overnight money and how much the fee is, your total cost may end up being even higher than if you overdid your account or paid a late fee.
Call money is advertised as an alternative to payday loans, which can be so costly that they can easily trap the borrower in an unbreakable cycle of debt. Yes, even $40 in fees is cheaper than most payday loans. However, there are already several apps and services that will give you a free cash advance, in many cases without a credit check.
2. Allowance can make it harder to manage large expenses
Perhaps the biggest risk of daily payroll is the possibility that you’ll overspend and not reserve enough to cover large items that come at intervals, like rent and utility bills. Sure, it’s nice to get your wages every day without having to wait for them, but even a disciplined person can have trouble budgeting for daily wages.
Be realistic when considering your spending and saving habits. Also, consider what you might do if you need to take unexpected unpaid days off after you’ve already accessed and spent money earned earlier in the pay period.
If saving money isn’t your way, overnight money may not help you gain financial security.
Do this instead
- Check out cash advance apps. MoneyLion is free, Dave is $1 per month. Both offer free cash advances, but you need to set everything up first. Before you can receive a cash advance, you must verify your identity, link your bank account, and download the app. Once you’re ready, a free cash advance takes 12 to 48 hours to complete.
- Get to know your budget. If you find yourself running out of money frequently, you may need to better understand your income and expenses. Choose a free budgeting app and track all your income and expenses for a while. This will help you develop the ability to anticipate your financial needs and you may even find some areas where you can reduce spending.
- Start saving money. Whether you’ve never had money in a savings account or had to use it up due to unexpected expenses, the need for same-day payments means you don’t have enough reserves — even in an amount as small as a day’s wages — to handle one financial distress. Start saving now, even if it’s just $10 or $20 per payday or month. Open a high-yield savings account online. Choose an account with no monthly maintenance fee. A good first goal is $1,000, but then strive to increase your balance to an amount that can pay for all of your expenses for three months without additional income.
Per diem can’t relieve a paycheck-to-paycheck lifestyle
When you’re living paycheck to paycheck, the solution isn’t to get your wages faster. Rather, it is about finding a way to create a financial buffer. You don’t need a daily salary for financial security. You can create this buffer yourself.
If you have the opportunity, continue to receive your salary every two weeks or weekly. Most people find it easier to pay big bills when their money comes in big chunks. Some people who get paid biweekly, for example, put one paycheck on rent and the next paycheck on everything else.
Having enough money on hand to cover small and medium-sized expenses will lower your stress levels as well as your overall expenses.
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