The holidays are a time for family, friends... and increased spending. In fact, national spending will be at a historic high. The National Retail Federation expects holiday retail sales in November and December – excluding automobiles, gasoline and restaurants – to increase between 3.6 and 4 percent for a total of $678.75 billion to $682 billion, up from $655.8 billion last year. This will be the highest it’s been since 2002.
Holiday spending impacts everyone. From buying gifts, traveling or higher grocery bills, it’s nearly impossible to avoid the costs of the season.
For your employees, the extra expenses can put a strain on their wallet and on their mood. Financial problems cause inability to focus at the workplace, and loss of production for companies.
How can you help your employees survive the holiday season and keep them focused during the fourth-quarter?
Provide an option for strategic purchasing
Spreading out the holiday cheer is an important financial strategy for those living on a tight budget. It’s nearly impossible to crunch the expense of presents, decorations and food into one or two paychecks.
Holiday deals spring up throughout the months leading up to the holidays. Being able to act on the deals immediately can help spread out the insane costs of the holidays.
Not everyone has the ability to jump on a hot deal, though. If you need to wait until payday, you might miss an opportunity that could wind up saving money in the long run. Offering a service like DailyPay means that your employees can access their earned wages on a daily basis, which gives them access to funds, when necessary. This can make it easier for them to take advantage of holiday sales as they appear.
Buying sale products here and there in the months leading up to the holidays can save money in the long run.
Avoid opening credit lines
Personal finance experts aren’t the only ones aware of the increased financial burden around the holidays. In fact, retailers are experts on this subject.
In order to entice customers to hop on their deals, retailers have a knack for “sweetening” the deal. If a customer opens a new line of credit, not only can they take advantage of the seasonal deal, but they can also take a certain percentage off of the total price. An extra 25% off your entire purchase is extremely exciting if you are looking for ways to fund your purchase. It’s also extremely expensive.
A report from CreditCards.com in 2016 showed that store cards charged an average of 23.84% interest, exceeding the national average credit card interest rate of 15.22%.
If you borrowed $2,000 at 23.84% interest, your monthly interest rate will be around $39.72. This means you won’t even start to pay off your principal until you pay more than $40 each month. Even if you could afford $40 each month, as your minimum payment, it would take 21.3 years to pay off your debt.
Another, even dire, outcome for employees needing extra cash is the temptation of payday loans. These are costlier than store credit cards and can be even more difficult to pay off - but they are easy to obtain. Payday loans create longer and more difficult financial hardships. Some reports show that payday loans can result in interest rates from 390-780%
Eliminate the temptation of an extra credit line by providing employees access to their already earned wages. If employees have access to their earned wages, it becomes less necessary to borrow from a third-party - they already have access to their funds.
Hopefully, these earned wages help save your employees money and deter them from signing up for expensive retail credit cards or payday loans.
Inconvenient trips to the bank
The holidays can be a whirlwind. From getting presents to arranging travel plans, to tying up loose ends at work, it’s easy to let important tasks slip through the cracks.
If your employees receive paper checks, they could easily get too wrapped up in the holiday spirit and forget to factor in the time to cash their check before holiday bank closures ensue.
This can be problematic. In fact, in the 2017 National Payroll Week survey called "Getting Paid in America", 71% of the 34,894 survey respondents claimed that it would be very difficult, or somewhat difficult to meet current financial obligations if their next paycheck were delayed for a week. Technology hasn’t made this a moot point, either. Nearly 30% of respondents of the same survey don't use a smartphone or tablet for banking services, which means that they still rely on a physical branch location.
Offering DailyPay helps eliminate this issue. DailyPay is only available to employees who have signed up for direct deposit. This means there is no room for error when it comes to getting paid. The employee’s wages will automatically be deposited into their account on payday - regardless of a hectic holiday schedule. This benefit can remove at least a bit of stress for a crazy holiday season. It can also save on your bottom line long-term.
Connect the dots
Offering DailyPay before the holidays is a great way to create goodwill for your company and help your employees through an expensive time of the year. You can unroll this new benefit alongside a popup “holiday financial wellness” training. Personal finance, budgeting and wise savings strategies are important lessons to learn and teach - even year-round. Starting the lessons during the holidays can be a great added-value for your company and a great way to show your employees that you care.