September 28, 2022

Why I never take my paychecks sooner

Image source: Getty Images

This service offered by payroll providers may not be the best option.


Key points

  • I had the choice to claim my paychecks sooner.
  • I chose not to because getting paid sooner will not improve my long-term financial situation.
  • If you prioritize saving for emergencies, it’s possible to break out of the lifecycle from one paycheck to the next.

My payroll service offers a unique feature: prepayment. Essentially, I have the ability to access my paycheck before the normal scheduled date when my money would typically reach me.

Although it might seem like a good way to access my funds quickly, I chose not to take advantage of it. Here’s why.

Receiving my salary two days earlier would not change my financial situation

The main reason I chose not to receive my paycheck before the due date is that it won’t actually change my financial situation or provide me with extra money.

Prepayment services are usually touted by payroll services as an alternative to payday loans or a way to cover unexpected expenses without borrowing. But, what usually ends up happening, according to data from the National Consumer Law Center, is that people tend to start relying on getting their money early every time. Once they get their early paycheck once, the money doesn’t last until their regular payday, so they end up getting their money earlier than expected every time.

Now that’s not likely to happen to me because I don’t live paycheck to paycheck. But since I don’t want to fall into a cycle where I rely on early access to my money to help cover my bills, I never want to go down that road. I don’t want to spend money until I’ve actually earned it, even if it’s my own money, because it will make life harder for me later – and increase the likelihood that I’ll have to borrow more in the future .

Should you receive your salary earlier than expected?

If you live paycheck to paycheck, early access to your money can seem like a lifesaver, especially if you have bills to pay before your regular paycheck arrives.

But rather than relying on access to this service, which is nothing more than a temporary fix that can aggravate long-term financial problems, it is better to completely break the paycheck-to-check cycle. of pay.

You can do this by prioritizing emergency savings and setting a budget that allows you to spend less than you earn each pay cycle. This may involve cutting back on your current expenses, especially as you work to build your emergency fund. Or it may mean looking for ways to increase your income, such as working more hours and/or taking a side gig.

But once you’ve been able to save money for emergencies and make sure you have money left over for your next paycheck, you won’t have to worry about your financial situation anymore – and you won’t have to rely on services. like early access to paychecks that don’t help improve your overall financial security.

If you haven’t built up an emergency fund yet and need to use this service once, it may be preferable to other borrowing methods depending on terms and conditions. But make sure you understand what you’re getting into and promise not to get into the habit of quickly accessing your paychecks.

Alert: The highest cash back card we’ve seen now has 0% introductory APR until almost 2024

If you use the wrong credit or debit card, it could cost you dearly. Our expert loves this top pick, which features an introductory APR of 0% until nearly 2024, an insane payout rate of up to 5%, and all with no annual fee.

In fact, this map is so good that our expert even uses it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review