Wagestream shares its tips for employees to go from financial stress to financial wellbeing – even without a payrise
Financial wellbeing fintech Wagestream is urging employees in Australia to take some simple steps to make the move from financial stress to financial wellbeing – and says that even with prices rising and pay rises hard to come by there are some simple steps that can be taken.
The encouragement comes after a joint report between ASIC and Beyond Blue released last month demonstrated substantial evidence that financial wellbeing and mental health are connected, and as Australians suffer from growing cost of living pressures.
The ASIC & Beyond Blue report found that financial stress can contribute to conflict, social isolation, guilt and shame, stress, low mood, low self-worth, substance misuse, panic attacks, self-harm, and even suicidal ideation and actual suicide.
On the other hand, financial wellbeing occurs when a person can meet expenses with some money left over and is in control of their finances and feels financially secure, now and in the future.
According to Josh Vernon (pictured), CEO of Wagestream Australia, there are a number of tactics Australians can implement immediately to begin the move from financial stress to financial wellbeing.
Use your own money (when possible) to pay for unexpected cash shortfalls
Josh Vernon continues, “It’s critical to have an emergency fund that can be tapped into if you find your car suddenly needs repairing or a huge energy bill falls into your lap. This is where automating regular savings is so useful.
“But if you find yourself in a sudden cash shortfall, the last thing you want to use is an ongoing debt facility like a credit card, or a payday loan with large fees. Instead, you can use your own money to pay for an unexpected expense through an ‘earned wage access’ offering.
“Products like ‘earned wage access’ let employees access a portion of their earned wages before the end of their payroll cycle. Because it is offered by employers, the fees are often subsidised, making it an affordable and responsible option.
“Knowing you can access this service at any point from an app on your phone can also create huge financial peace of mind, even if you never end up using it.
“Wagestream charges a flat $2.49 fee for its earned wage access product, regardless of the amount an individual accesses flexibly. So, it’s $2.49 to access $200 or $2,000 – nothing complicated here.
“In many cases an employer covers this cost for their employees as an employee benefit. When the employer doesn’t cover the cost, the employee pays the flat fee. There are no other fees for employees to use the app – no fees to use our Grow, Learn, Track, or Coach features and no interest or late fees on earned wage access.”
Real wages are dropping, so get on top of debts
Josh Vernon continues, “Real wages are at their lowest point since late 2011 and most experts think this trend won’t subside until mid to late 2023. Inflation in Australia and globally is continuing to rise and it’s unlikely we’ll get inflation within the RBA’s target band until next year.
“Despite an intense labour shortage driving up wages, wage increases are not yet in line with inflation. It will take a few years for real wage growth to catch up to inflation once
inflation reaches the RBA’s target band. Most experts expect us to hit 2015 levels of real wage in 2025 to 2026.”
“Banishing financial stress involves getting on top of any debt by being realistic about how much you owe and the timeframe in which you can pay it back.
“If you have multiple forms of debt, it can be helpful to create a list that prioritises debt from most expensive to least expensive. Then you can focus on paying down the most expensive debt first.
“Debt consolidation is potentially an option too, which helps to reduce the financial complexity in an individual’s life. This complexity can lead to angst which can then translate into poorer financial decisions and outcomes.
“Most individuals take out debt as a necessity and sometimes these debts can pile up. Debt consolidation can mean just one regular repayment schedule, which gives you a clearer picture of when and how you might finally become debt free.
“It can, however, cost more in interest if the interest rate is higher and/or the loan period is extended. So each individual has to weigh up what works best for their own situation.”
Case study: Eliza Kiers
Eliza Kiers recently moved from London to Sydney with her British partner and three children, to pursue their dream of buying a house in the Byron Bay hinterland.
Her current challenge is to save for a deposit on a home, while travelling to the UK every few years, contending with expensive Byron Bay rent, and dining out at Byron Bay’s incredible restaurants (part of the reason they wanted to move there!).
When she found out about the financial wellbeing features on the Wagestream app, including ‘earned wage access’, she was stoked for the extra help in achieving this goal.
According to Eliza, “As much as I’d love a pay rise, I don’t see how employers could ensure salaries rise as quickly as inflation! But any support or tools my employer can provide in helping me be smarter with managing the money I have would be amazing, as I don’t feel that managing personal finances well is something that comes naturally to everyone. Helping employees gain these life skills would be a real advantage.
“A friend in the UK told me about earned wage access, and to be honest, I initially didn’t quite believe it. I spent the first week telling all my friends, ‘Is this for real?! They give you access to your money straight away!’ It’s honestly crazy that more employers aren’t offering it!
“When we moved to Byron Bay, I was short on funds because I hadn’t received my first Australian pay cheque yet. So I used earned wage access when we needed to pay a rental bond deposit on the property we are living in now, on the same day we found it. This was significantly cheaper, smarter, and easier than using a credit card or a loan.
“Discipline is not a strong point of mine! I have automatic transfers set up directly from my pay, so I don’t even realise I’m putting money away. On the Wagestream app I can see how much I’ve earned each day and watch it going up – I find that really motivating. It’s like a Fitbit tracker except for my money.”
