So, my Twitterino chums - vote in this highly sciencetific poll or leave a reply.
How often would you like to get paid?
money pay work · 6 comments · 600 words · read ~208 times.
In the UK, most professional jobs pay monthly. In the USA, it seems most professional jobs get paid every two weeks.
This usually comes as a great shock when someone from one side of the pond finds out how poorly employment conditions are on the other side. Naturally, everyone believes their own way of doing it is superior.
Both systems have advantages. The UK way is better for aligning with monthly bills. The US is good for unexpected bills. Read the whole Twitter thread to see what other people think.
But why can't we be paid daily?
When I first started working, my pay packet was - literally - an envelope stuffed with cash at the end of the day. It caused so much hassle to have a bunch of people lining up in the office to physically pick up their money, they moved to automated bank transfer. Because of banking fees, they made that monthly. With much grumbling and discontent.
In the UK, bank transfers are pretty much instant. For personal transfers they're also free. If you're a business, bank transfers cost money - as does the administration of payroll services.
Imagine - once BitCoin has realised its dream of free and fast money transfers 🤣🤣🤣 - that bank payments were also free and instant. What would the advantages be of daily payment?
- Better protection if you quit your job or your employer lets you go. No more hoping they don't screw you over on the final pay-cheque.
- Less variability of getting paid more per-day in February and less in December.
- No need to have an early Christmas payday.
- Leap years get you an extra day of pay!
There are, of course, some disadvantages.
- If you've ever played a game like Universal Paperclips, you'll reach a point where you have to balance your income and outgoings which are constantly fluctuating.
- What if your electricity bills want paying daily? No problem if you've got savings - but if you're living payday-to-payday and it's a pain.
- More opportunities for things to go wrong.
Personally, I get paid on the last day of the month and have all my regular bills come out of the first day of the month. So, for a day, I feel rich! Then I get to see what discretionary spending I have available for the rest of the month.
I could see the advantage of going fortnightly - whether my bills did or not. But I'm on top of my finances and have enough financial discipline not to spend this week's pay when I know there's a bill next week.
Daily pay... I am predisposed to like the idea of instant payments. And it feels like going back to a day's wage for a day's labour ought to be satisfying. But feels like a lot of admin, checking to see if money has arrived every day. Is it dispiriting after a crappy day at the office to see "only" 1/365th of my pay?
Would you want to move to a different payment cycle?
Not everyone is waged or salaried.
As a freelancer, my income comes in fits and starts, against invoices.
Yes, I'm like Andy - the majority of my income comes from invoices that my company submits to other companies, and it would be challenging to do that on a much more regular basis.
I do like the idea of my bills coming in on a daily basis, though; it would be easier to understand them in proportion.
"Today you spent £3 on electricity, £3 on gas, £1 on car insurance, £10 on health insurance, £10 on your pension..."
etc.
I guess a third-party aggregator could provide this for you as a service: you pay one daily bill to them and you get all the information about where it's going. They arrange that all the bills go to the right people at the right time. Mmm. I like that; I feel a startup coming on... 🙂
In the States, unless I'm much mistaken, a lot of people still seem to need manual intervention in their bill-paying; you do it by cheque each month, or by logging in and doing lots of bank transfers for the right amounts. Seems like a nightmare to me; I try to make sure everything is on direct debit. Am I right, or are things more automated in the US now?
Alex says:
When I lived in the US pretty much all my bills (except my rent and my work credit card I think) were paid by ACH which is similar to direct debit (but using the check/cheque clearing system).
Alex Gibson says:
I have a limited company, from which I now pay myself a modest PAYE income. I've set this to the UK usual of monthly, although it could really be anytime. This is to sync with credit card bills etc. Monthly feels like a good cadence to me - I've always been careful with budgeting, and have everything set up via monthly Direct Debit that can be. This way, there is a good, regular pattern to the incomings and outgoings, and I can project a graph over time to see how things. What I'm really not keen on is annual or quarterly bills - in theory I can project these just as easily, but it always comes as a nastier shock. I pay car insurance annually upfront and wish I could pay monthly without increasing my premium, but even though I find it frustrating that even for government agency there is a premium, I pay my road tax monthly so it all just happens automatically and I can't accidentally lapse. I resent the small surcharge but pay it for peace of mind. So for me, if everything could just converge on monthly, that would be super. This month will be an interesting one as on the 1st my PAYE salary standing order goes from my business account to my personal account, both with the same back, and it will be playing Poohsticks with direct debits scheduled to come out on the 2nd – but all of which will actually transact on Monday 3rd! The bank couldn’t, or wouldn’t, say for sure what will happen there, even though there are 2 runs per day, and there is no excuse for them not to know how it will work in an age of millisecond transfers... Banks seem to expect us to accept obfuscations that date back to wood panelling and knowing your bank manager's name...
When I first started work at Kodak in 1986 you were given a choice of being paid weekly or four-weekly (they were still on their 13-period-year system at the time). One of the things about getting 1/13 of your pay each time was that there was always a month coming up to Christmas where you would get paid twice in the same month, which felt excellent.
Sadly they moved off their 13 period system on or about 1988, to harmonise with the rest of the world.
I like the idea of a fortnightly payment system. One fortnight is for bills, one is for savings and investment.
The difference left over each week can be for spends.
Being self-employed, I could experiment, but I like how I’ve automated most of my monthly finances.