Many of us go through life trying to find the right balance between managing our day-to-day finances and longer-term financial planning.

Forward-looking employers are stepping up to help. They’re prioritizing financial wellness benefits that inform, educate, and support employees at every stage of their life journey.

Some are taking their quest to promote financial wellness a step further by revisiting their pay frequency models. They’re exploring how shortening the time between employees performing work and getting paid for it can help advance them toward their financial goals.

Why Workplace Financial Wellness Matters

A recent report by PwC reveals that 1 in 6 full-time employees in the U.S. are stressed about their finances. Another report by Forbes found that 37% cite financial pressure as their top cause of stress.

Increasingly, employers recognize that when employees experience financial stress, it’s hard for them to “leave it at the door,” and this can ultimately impact their mental and physical health as well as workplace productivity and morale.

What Are the Components of Financial Wellness?

Let’s first understand what we mean by “financial wellness.”

Feeling in control: People in a state of financial well-being feel in control over their money, can cover expenses comfortably, pay their bills on time, and don’t have to worry about having enough to get by.

Ability to absorb financial shocks: Financial wellness means having a savings safety net or alternative resources to help prevent financial shocks (like the loss of a loved one or unexpected unemployment) turning into long-lasting setbacks.

Payroll Frequency Models and Trends

Let’s take a closer look at the different pay frequency models and their pros and cons.

Monthly pay: Employees are paid once a month. These days, it’s the least common pay schedule (just 10.3% of businesses use this model), and it’s the least preferred by employees.

Bi-weekly pay: Employees are paid every two weeks on the same day. 

Semi-monthly pay: Workers are paid twice a month, usually on the 15th and the 30th or 1st. This model works well for companies with mainly salaried employees.

Weekly pay: Employees get paid at the end of each week for hours they worked during the week prior. 

On-Demand pay: This model is quickly gaining traction. According to a recent KPMG survey 79% of surveyed workers are more willing to switch to employers already offering on-demand access to wages. 

On-Demand Pay

On-demand pay, also known as earned wage access (EWA), is an instant payroll model where employees can withdraw their already-earned wages whenever they want.

When the on-demand pay provider’s solution is tightly integrated with the company’s payroll platform, this delivers the best of both worlds to employees and employers. Employees enjoy complete flexibility around their pay, while the administrative burden on the payroll team is minimal.

The Positive Impacts of More Regular Pay Frequency

Here are some of the drawcards of moving to an on-demand pay model:

• Recruitment and retention: On-demand pay enhances a company’s reputation as an employer of choice, which helps them attract and retain top talent in a competitive job market.
• Reduced administrative burden: On-demand pay eliminates much of the manual effort associated with traditional payroll cycles, such as check printing and distribution.
• Financial dignity: With on-demand pay, employees are empowered to address unexpected expenses or financial emergencies promptly and not resort to predatory lending options. 
• Sound financial habits: When employees know they can access their earned wages on demand, they’re in a position to manage their cash flow effectively. 
• Promotes financial literacy: Employees gain a clearer understanding of their earnings, spending, and savings patterns.

There are many ways you can help your workers accelerate their journey to financial well-being. Giving employees the option of accessing, spending, and saving their earned wages on their own terms with on-demand pay is an effective strategy.

An on-demand pay solution like Payactiv comes with free employee financial wellness benefits, such as budgeting, saving tools and 1-on-1 financial wellness counseling, all at no cost to you.

Learn more about Payactiv’s service, or book your demo now.

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