Getting paid every day might sound like a refreshing change when you’re trying to make ends meet. But there are potential drawbacks.

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Q: Throughout the pandemic, my employment situation has thankfully been more on than off, but I’ve had to figure a lot out that I didn’t ever think I’d face. I had a career and was climbing the corporate ladder, and now I’m working several different jobs each month to make ends meet. With the newest COVID-19 restrictions, I’ve had to find work yet again and did manage to do that. During the on-boarding process at this newest job, I found out that one benefit this employer offers is getting paid every day. I have never had that option before and don’t quite know how best to use it. What can you suggest? ~Marcus

A: Thankfully, you’ve been able to pivot and find enough income to support yourself during these trying times. I’m sure it wasn’t easy switching from a steady, career-track job to piecing your work weeks together with multiple employers and various shifts. While you likely faced a whole host of emotions and a fair share of frustration throughout that process, the skills you learned will be valuable as you regain stability.


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Employers do their best to offer attractive benefits that will recruit and retain employees. One benefit offered by a limited number of employers is earned wage access (EWA). This amounts to offering employees the ability to get paid every day by accessing the money they earned right away. Anyone who is self-employed or who works in the gig economy might already receive at least some of their income this way, but in the service and labour industries, for example, it is not the norm.

Earning income daily versus accessing your earned wages

Earning income every day and waiting to be paid that income every other week or twice a month, for instance, is different than accessing your earned wages. Traditionally, accessing your earned wage meant asking your employer for an advance on your paycheque. Some employers are willing to do this while others are not. Seeking out the services of a payday loan lender to receive a loan against the income you will receive on your next paycheque is another, albeit costly, way of accessing your earnings more immediately.

The costs of earned wage access (EWA)

When it comes to EWA, apps facilitate the payment of wages at the end of each shift and the service is marketed to both employers and employees as a way to give someone more control over their personal finances. There are a number of EWA and daily pay service providers and the fee structures vary. With some, the costs are largely borne by the employer. This could lead to a reduction in other benefits as employers consider how many benefits in total they can afford to offer. With other services, there are costs to the employees, which might seem small when considered as one-offs, but they add up quickly if someone accesses their income at the end of each workday.


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How the EWA is administered can pose a stumbling block for some. The money isn’t automatically deposited to an existing bank account. It is usually enabled through an app for your smartphone and/or a specific reloadable debit card. An employee must then transfer the money to their own bank account or use the provided card to make their purchases, and there could be fees involved with these transactions. Your spending habits then don’t remain private between you and your financial institution, but a third party has access as well. While this doesn’t automatically mean that your employer receives this information, electronic agreements could put your personal information in the hands of entities that you’re not aware of. Be sure to read any service agreements for an EWA program so that you know what you’re signing up for.

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Are there any benefits to getting paid every day?

Getting paid every day might sound like a refreshing change when you’re trying to make ends meet. If you’re accustomed to relying on payday loans or the services of high-interest lenders, an EWA might charge lower fees and give you the cash you need for an essential expense. If there’s a chance your employer will not be able to pay you after two weeks, taking your wages as you earn them means you’ve got less at risk after two weeks. If you don’t have good access to credit and aren’t good at saving, getting money every day might seem extremely appealing. However, the drawbacks are significant and can’t be overlooked.


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The key drawback is that EWA makes it hard to manage your money

Earned wage access may not empower wage earners but instead hinder their ability to achieve financial well-being. In short, it makes managing your money difficult. Many people already struggle to live according to a budget and match their spending to their paycheques. They find it difficult to keep on top of their bills and debt payments, and saving towards larger and unexpected expenses can be nearly impossible.

It’s hard to get ahead when you’re living payday to payday. Spending what you earn every day doesn’t let you get a paycheque cycle or two ahead, which is what’s needed if you want to set money aside in an emergency fund and create a safety net for yourself.

Planning for expenses

When you’re tempted by the option of daily pay, think about your current financial obligations. Rent and utilities are due monthly, not daily; credit cards could be paid daily, but that type of a payment schedule would pose hardship on many; and car loans are often paid biweekly or monthly according to a more traditional income pattern.

Functionally, most people have aligned their regular expenses with when they receive their income. This also makes it easier to plan how to manage variable expenses like groceries or gas. It’s normal to think about how much money you’ll have in order to buy groceries after payday and when you can afford to fill your gas tank. Daily pay sounds like an easier way to cover living expenses when, in fact, it will create additional stress as you attempt to ensure you’ve got money set aside for when it’s needed.


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Dealing with reduced income

When you receive income every day, you start to plan and count on that income continuing in an uninterrupted manner. However, when you are unable to work every day — e.g., due to injury or illness — or face reduced hours, your ability to keep on track with your money is jeopardized. It’s only natural to anticipate how to afford your expenses, and coming up with an alternate plan is challenging when all of your finances hinge on receiving daily pay.

When you are paid on a less frequent schedule, i.e., biweekly or semi-monthly, a pool of money comes available to pay first for what is needed and wanted. For instance, if you need to take a day off because of a child-care matter, then your dinner out can be cancelled in lieu of covering the rent payment. When you draw your wage every day, there is no pool of money unless you create it for yourself, which leads to the most significant drawback of EWA: the inability to plan ahead financially.

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Saving towards your goals

Setting a little money aside every two weeks with an automated payment, which is by far the most effective way to save, feels almost painless. It leaves you with enough money in your chequing account to find some happiness, and those small savings deposits will grow. However, saving is nearly impossible when you take your pay on a daily basis because there is never enough left over to save, let alone pay yourself first.


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Being paid daily will make saving unrealistic. You won’t receive large sums of money. Setting up automated savings will be difficult because your actual days and hours worked may vary. Without any savings, it’s easy to fall victim to circumstances beyond your control. It leads to a reliance on credit to make ends meet because your cash flow disappears with the obligation to make your debt payments.

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How to manage EWA or getting paid daily

In addition to a formal EWA program, there are situations where someone might get paid daily, or several times a week. These include, for instance, those who freelance, work two or three jobs, are self-employed, or who work seasonally. In all of these cases it’s important to treat your income as irregular and follow money management strategies that help you deal with irregular income.

One of the best strategies to manage fluctuating income is the holding account method. Everything you earn and any extra money you receive (e.g., government benefits, income tax refund or alimony) is deposited into a bank account that is separate from your regular chequing account. Then based on your budget and a set schedule, you transfer a predetermined sum from your holding account to your chequing account.

From your chequing account you then operate as you normally would, paying your bills and spending on what you need and want. Savings can be set aside either directly from the holding account, or as an expense from your chequing account, as long as it is still set aside regularly.


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The bottom line on daily pay and earned wage access (EWA) options

Technology has facilitated many changes to personal finance: the way people shop, bank and now how they get paid. But in actual fact, for most Canadians, being paid on a daily basis is likely to cause more hardship than it prevents. Even if the fees are low, no one should have to pay any fee to get their paycheque. Though $3 a transfer might seem insignificant, that cost adds up to $30 or more over a traditional pay period. If you think that’s no big deal, I challenge you to take that $3 a day and save it instead. You could save over $1,000 in a year! Savings, not daily pay, is what leads to long-term financial stability and well-being.

Related reading:

How to Stop Overspending – 7 Tips and Tricks

Why Credit Card Chargebacks Matter for Your Money

Knowing Your Net Worth Can Help You Achieve Your Financial Goals

Scott Hannah is president of the Credit Counselling Society, a non-profit organization. For more information about managing your money or debt, contact Scott byemail, check nomoredebts.orgor call 1-888-527-8999.


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