With salary advance schemes becoming an increasingly attractive option as a result of the cost of living crisis, we ask Jonathan Watts-Lay, Director, WEALTH at work, some of the things that may need to be considered.
He comments: “It is important that salary advance schemes are explained properly to staff so they understand the true cost of it. These types of schemes normally come with a charge, so whilst they can be helpful as a ‘one off’ (e.g. the car needs fixing and without the car you can’t get to work and earn!), they are not such a good idea if they become the norm to pay for usual weekly/monthly expenditure. So, if employers are looking to introduce this scheme, it’s important that financial education is implemented around it so that it’s fully understood. However, to avoid getting into a cycle of debt, employees would be more likely to benefit from getting help to understand the various financial issues they may be facing, and how to better manage their finances. In the current environment, financial education, and guidance on topics such as how to budget, tips for saving money, and debt management, as well as explaining how the workplace benefits available can help, are particularly useful in helping employees build their financial resilience.”