Become financially empowered and design the life you want to live, free from financial stress. Financial empowerment isn’t just about money; it’s about being informed and skilled. It’s about building trust with a banker supporting your financial journey. Economic empowerment begins with understanding your current financial circumstances. Evaluate your earnings, outgoings, debt, and savings as part of this process. You can make wise financial decisions and regain control by clearly showing your current financial status. A sound financial situation varies depending on your viewpoint, but it usually includes paying off debt, having savings for unforeseen expenses, and having enough income to cover living costs. Living paycheck to paycheck in today’s world can be challenging due to the continuously rising cost of living. You can, however, take charge of your financial condition and work toward a better future by receiving early paychecks.
It Gives You a Head Start
Many live paycheck to paycheck, and urgent expenses can accumulate throughout the month. It can lead to costly overdraft fees, interest charges, and a financial hole that could take months or even years to get out of. Early direct deposit, a feature that lets you receive early paychecks up to two days ahead of time, solves this problem that some banks and credit unions have started to offer. This option is also available through prepaid debit cards. Unlike payday advances, there’s no risk to the bank or credit union by allowing people to receive their paychecks ahead of schedule. They may charge you a fee to make the funds available earlier. But they don’t have to because the funds will be returned to them in their next regular deposit.
Having access to your paycheck earlier can help you pay off urgent bills and build your savings, which could mean you’ll have more cash on hand to cover unexpected expenses or to reach that vacation fund goal you set for yourself. Consider establishing a recurring transfer from your checking to your savings account every payday.
It Helps You Build Savings
If you’re one of the many Americans who live paycheck to paycheck, you may struggle to put aside a portion of your income. It is a big problem given that 7 out of 10 Americans say they are only one paycheck away from financial disaster. Luckily, there are ways to save more. One of the best is to use a “pay yourself first” strategy, wherein you deposit part of each paycheck into a savings account. It can help you progress toward your short-term or long-term savings goals, from creating an emergency fund to saving for a house or even starting a business.
Another option is to set up a recurring transfer between your checking and savings account. You can choose to do this each payday or once a month. No matter your preferred method, it’s essential to stick with it. Over time, even a modest daily savings of $10 or $20 will mount up.
Some banks and credit unions offer early direct deposit, which lets you receive a portion of your take-home pay in advance. It can give you more flexibility to cover unexpected expenses, especially if you typically overdraft your account or otherwise spend down your paycheck before the next comes in. This feature is also available through challenger banks and some credit card companies.
It Gives You More Money to Spend
The structure of getting paid on a particular day each month allows you to pay bills before the end of the month and prevents overdraft fees. This structure can also promote overspending, but tools can help lower your costs. Financially empowered people are not afraid to be flexible when life throws curveballs. They know that emergencies happen, and if they do, they’re prepared to use an emergency fund or a personal loan with a lower interest rate than credit cards. They also feel confident in their ability to live comfortably during retirement. Whether they’ve worked with a planner or built their retirement plan, they’ve determined how much they need to save to retire at the age of their choice and not worry about running out of money.
If you’re not feeling financially empowered, the good news is it’s always possible to change your mindset and make a commitment to become more knowledgeable about personal finance. Educating yourself can build new savings habits, reduce debt loads, and reach your long-term goals. It is the foundation of financial empowerment. We offer free financial education resources designed to support your needs at every stage of life.
It Gives You Time to Think
A few days’ early access to a paycheck can help consumers budget, pay bills, and cover urgent expenses without relying on credit cards or late fees. A few challenger banks and some credit unions offer this banking feature called Early Direct Deposit. It’s typically available for those who use direct deposit. There’s no risk or additional cost for the bank to make the money available earlier than it would typically be. Creditors use the service as a marketing tool to attract and retain customers. But it can also negatively impact consumers who live paycheck to paycheck, he adds. The payday advance is just like a payday loan.
Harsh Srivastava is a recent graduate from the field of Computer Science & Technology. He takes a keen interest in exploring technology to its very depth and also likes to write about it. Harsh currently works as a freelancer and also has his own YouTube Channel.
