The 2 biggest reasons getting a daily paycheck is a bad idea


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Accessing your earned wages every day can hurt you financially.

Key points

  • Same-day payment can be expensive, but free options are available.
  • Spending your money as you earn it could leave you without funds for rent or other major expenses.

When you have an urgent need for cash and are running low on funds, payday can seem like an eternity. You may be wondering (rightly so) if it makes sense to let someone else keep the money he’s already earned, especially if he needs it today. This is where the daily paycheck comes into play. Before you touch an application to deposit today’s wages into your bank account, consider the potential drawbacks of same-day payment.

1. Daily payment can be expensive

Many payday platforms charge a fee when you access your money before payday. As much as possible, try to avoid spending money to receive your salary. If you’re running low on cash between paydays, those extra few bucks better be in your pocket, not in the app. A couple of bucks may not sound like much, but the fees add up.

Depending on how often you access Daily Pay and the amount of the fee, your total cost could even end up being higher than it would have been if you had overdrawn your account or paid a late payment fee.

Payday is advertised as an alternative to payday loans, which can be so expensive that they easily trap the borrower in a cycle of debt that is difficult to break. Yes, even $40 in fees is cheaper than most payday loans. But there are already multiple apps and services that allow you to get a free cash advance, in many cases without a credit check.

2. Paying daily can make it hard to manage big expenses

Perhaps the biggest risk of daily pay is the chance you’ll overspend and not set aside enough to cover expensive items that come at intervals, like rent and utility bills. Sure, it’s nice to get paid every day without having to wait for it, but even a disciplined person can have a hard time budgeting for daily pay.

Be realistic when looking at your spending and saving habits. Also, consider what you might do if you have to take unexpected unpaid days off after you’ve accessed and spent money you earned earlier in the pay period.

If saving money isn’t your style, paying daily may not help you build financial security.

do this instead

  • Take a look at cash advance apps. MoneyLion is free, Dave is $1 per month. Both offer free cash advances, but you need to be ready first. Before you can get a cash advance, you’ll need to verify your identity, link your bank account, and download the app. Once you’re ready, a free cash advance takes 12-48 hours.
  • Know your budget. If you frequently find yourself short on cash, you may need to gain a better understanding of your income and expenses. Choose a free budgeting app and track all your income and expenses over time. This will help you develop the ability to anticipate your financial needs, and you may even find some areas where you can cut back.
  • Start saving money. Whether you’ve never had money in a savings account before or had to deplete it due to unexpected expenses, the need to pay on the same day means you don’t have enough reserves, even as small as a day’s payment. – to handle a financial emergency. Start saving now, even if it’s just $10 or $20 each 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 work on building your balance to an amount that pays for all of your expenses for three months without any additional income.

Daily pay can’t ease a check-to-check lifestyle

If you live paycheck to paycheck, getting paid faster isn’t the solution. Rather, it is finding a way to create a financial buffer. You do not need daily payment for financial security. You can create that buffer yourself.

If you have the option, continue to get paid on a bi-weekly or weekly schedule. Most people find it easier to pay large bills when their money comes in large amounts. For example, some people who get paid every two weeks put one paycheck on rent and the next paycheck on everything else.

Having enough money available to cover small and moderate expenses will reduce your stress level and your overall costs.

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