Why Payroll Savings Should Be Offered Alongside EWA
Financial wellbeing programmes have become essential for modern employers looking to support their workforce. While Earned Wage Access has gained significant traction for providing immediate financial relief, it’s worth considering pairing it with Payroll Savings schemes. These two financial tools address different aspects of employee financial health, creating a comprehensive solution that tackles both short-term cash flow issues and long-term financial stability.
When offered together, payroll savings and Earned Wage Access create a balanced approach to financial wellness that can significantly improve employee satisfaction and retention.
What is Payroll Savings?
Payroll Savings allows employees to automatically contribute a portion of their salary to a high-interest, FSCS-protected savings account before they receive their pay. This approach removes the mental burden of remembering to save and eliminates the temptation to spend money that could be building their financial future.
The key benefits of Payroll Savings include:
Automatic habit formation: By deducting savings directly from payroll, employees develop consistent saving habits without conscious effort. The money is set aside before it hits their current account, making it easier to stick to savings goals.
Higher interest earnings: Unlike traditional current accounts that offer minimal returns, payroll savings typically provides access to higher-interest savings products, helping employees' money work harder for longer periods.
Easy access when needed: Despite being a savings programme, employees retain access to their funds when genuine emergencies arise, providing peace of mind alongside financial growth.
What is Earned Wage Access?
Earned Wage Access enables employees to access a portion of their earned wages before their scheduled payday. Rather than waiting for the monthly pay cycle, workers can withdraw money they've already earned to cover unexpected expenses or bridge temporary cash flow gaps.
Earned Wage Access serves as a financial safety net, helping employees avoid costly alternatives like payday loans, credit card debt, or overdraft fees when unexpected costs arise.
Why These Solutions Complement Each Other Perfectly
While both tools address financial challenges, they work at different time horizons and serve distinct purposes. This complementary relationship makes them particularly powerful when offered together.
Earned Wage Access provides immediate financial relief: When employees face unexpected expenses, whether it's a car repair, medical bill, or household emergency, Earned Wage Access offers instant access to earned wages. This immediate relief prevents employees from falling into expensive debt cycles or making financial decisions that could harm their long-term stability.
Payroll Savings promotes long-term planning: Simultaneously, Payroll Savings helps employees build financial reserves over time. By automatically setting aside small amounts each pay period, employees create a growing buffer that reduces their reliance on emergency borrowing. The compound effect of regular savings contributions, enhanced by higher interest rates, builds financial cushions over months and years.
Enhanced financial resilience: Together, these tools create multiple layers of financial protection. Earned Wage Access handles immediate crises while payroll savings builds the financial foundation that reduces the frequency of such crises. Employees develop both reactive tools for emergencies and proactive habits for long-term security.
Reduced financial stress across timeframes: Short-term financial stress decreases when employees know they can access earned wages if needed. Long-term financial anxiety diminishes as savings balances grow consistently. This comprehensive approach addresses financial worry from multiple angles.
Better financial behaviours: Earned Wage Access prevents employees from making desperate financial choices during cash flow crunches, whilst payroll savings instils disciplined saving habits. Rather than competing, these behaviours reinforce each other. Employees who save regularly are less likely to need Earned Wage Access frequently, and those with Earned Wage Access are more willing to commit to savings knowing they have emergency options.
Building Complete Financial Wellness
The combination of payroll savings and Earned Wage Access reflects a mature approach to employee financial benefits. Rather than focusing solely on crisis intervention or exclusively on long-term wealth building, this pairing acknowledges that employees need both immediate flexibility and future security.
Employers who have a programme which offers both often see improved employee engagement, reduced financial stress-related absences, and higher retention rates. Employees appreciate having comprehensive financial tools that work together to support their overall financial health.