What would you do with the money if you received and extra paycheck?

How Would Workers Use An Extra Paycheck to Improve Their Financial Wellness?

U.S. workers would invest an extra paycheck or pay down debt with it, rather than use the money to buy themselves an extravagant gift or make a down payment on a new car, according to a new survey of managers and executives at small– to medium–sized companies conducted by Ceridian, a managed human resource outsourcing solutions company.

When asked, “If you could take one paycheck and do anything with it, what would it be?” 40 percent of respondents reported that they would invest the paycheck, followed by 29 percent of respondents who would use the money to pay down debt. Save the money for a rainy day ranked third at 15 percent. Less popular responses were starting a home improvement project (7 percent), and contributing to a favorite charity (5 percent). Buying an extravagant gift for themselves or making a payment on a new car were decidedly lowest on the list of choices. Managers were more likely than executives to report that they would pay down debt with an extra paycheck; managers were largely split between paying down debt and investing the money.

Paychecks and personal finance choices have the potential to impact employee productivity. In the American Payroll Association’s 2005 Getting Paid in America Survey, nearly 74 percent of people surveyed revealed that it would be very or somewhat difficult to meet current financial obligations if their next paycheck were delayed for a week.

In the real world an extra paycheck is a rare occurrence. However, there are opportunities to improve your financial wellness that we often overlook. Tax returns and bonus checks well spent can provide a great relief to the financial stresses of day to day living. Applying this money to cut high interest credit card debt increases the value of the money by reducing the minimum payment required in subsequent months. It is the small expenses that can add up, often more than an extra paycheck. Writing down a log of all the little expenses (coffee shops, quick marts, impulse purchases, etc.) each month will help to identify potential sources of the “extra” paycheck necessary to meet real financial obligations.

SCS Staff