7 ms·

Will moving people to daily wages solve financial stress?

5 points by FahadUddin92 9y ago

I came across an idea that said if people in offices are paid daily using a mobile app and they can withdraw their till date earnings, financial stress will reduce and they wouldn't need pay day loans. Whats everyone's opinion?

skofgar 9y ago
Wow... in Switzerland people get paid monthly and I think most of them are not in financial stress. But then having loans and credit cards aren’t as popular either... is there a correlation between the salary payout frequency and financial stress?
- skofgar 9y ago
  I wonder if the cause of financial stress is the credit/loan system. I think there is a cultural difference, which - in the US - encourages people to get loans and buy things they cannot necessarily afford. While elsewhere you’d save up and then buy the thing of desire. *this is a little too general and doesn’t apply to everything (e.g. houses etc)
  - FahadUddin92 9y ago
    Please check my above comment.
- deleted 9y ago
  [deleted]
- FahadUddin92 9y ago
  Yes. Its common in US. https://www.payactiv.com/absenteeism-at-work-due-to-financial-stress/ https://www.payactiv.com/absenteeism-at-work-due-to-financia...
  - skofgar 9y ago
    Interesting. I don’t think it’s the payout frequency though that causes this problem, nor could solve it. Couldn’t it be that people are just having a tendency to not save money, due to various reasons (low salary, not seeing the need to save money, buying irresponsibly, ...) What do you think?
    - FahadUddin92 9y ago
      There could be countries where average salary is low and prices of goods are high which causes them not to save money. Such apps could be life savers.
      - skofgar 9y ago
        Paying them daily doesn’t allow them to buy more though. The salary overall (at the end of the month) doesn’t change. I guess you could buy more expensive stuff more spontaneously, which probably would make the problem worse.
richardknop 9y ago
No, this wouldn't solve the underlying problem which is these people don't make enough money. They either need to make more money or spend less. By paying them daily you don't solve the actual problem.
- skofgar 9y ago
  I agree.
owebmaster 9y ago
> Will moving people to daily wages solve financial stress? A month with daily pay would still have 28-31 days so not by much. I think it might worsen the problem because when you you don't make it productive in a day you'd be in the worse situation, with a job and without money.
whb07 9y ago
You mean like Uber does?
mattbgates 9y ago
"The money problem" is a human problem, and unfortunately, one that has been with us since our beginning. We always think that if someone just gave us enough to pay our bills, our mortgages, and a little extra, we'd be happier. Even if we won the lottery and earned that $30 million after taxes, we'd be happy, but really, it does bring about more problems. We always want more and are never satisfied. We want and want and want! When we have more money, we are likely to spend more money. When we don't have a lot, we make due with what we have, yet we still spend it, usually paying our bills and our rent, and just trying to figure out how to come up with a little bit more. The true fact is: elementary school, middle school, and high school teach people nothing about finances, and unfortunately, the majority of people get into debt and make their mistakes and figure it out, and some never actually do figure it out, and remain there for life. I'm from the generation where I made $5.05 an hour at my first job. Can you imagine telling someone they are going to make that an hour? That is crazy. Unfortunately since then, greed has skyrockets, with very little change in minimum wage. I know it is now $7 in most places and $8-$9 in many more.. $8-$9 was a lot of money when I was 18! Luckily now I'm a developer.. making no where what I want to be making, but I'm making more than I'd thought I'd ever be making in my life. There is no way to solve the money problem until people are actually educated. The fact is... housing prices are insane. Why is that a house in 1975 was $35k yet in 2017 it is $200k. Inflation? Sure, lets call it that... who controls that? The more money printed, the less value it has? Who makes up these rules? Economists? Because as far as I can see.. economists would have solved the issue by now.. but there is far more to it than that. The problem of the world is two factors: Greed and instant gratification. Credit Card company and banks: "Hey you want this now? We'll lend you money. You want to go to school but can't afford it because the price is too much? You want that house? We got you! Here's money you don't have! We'll give you all the money you want as long as you pay it back with interest!" Most people (Americans): Hell yeah, lets do this! I'm in my 30s... I can't help but realize: After I turned 18 and decided to go to college, I've owed some company somewhere money. After I paid off my student loans... I was lucky enough to understand credit card debt and never had any... but then I took on a mortgage.. now I'll be paying that back for who knows how long.. the 30 years they give me in which they make over $100k in interest if I don't make more than just the minimum payments? If you think about it... the majority of our lives... is just spent paying someone back. Why is life designed like this? Because someone somewhere continues to make money and is happy about it.. "someone" is usually not just one person, but a great many people.
crispytx 9y ago
I think one of the biggest problems is inflation. We have an inflationary monetary system, so workers wages can fall way behind what it actually costs to live.
- Gustomaximus 9y ago
  I've never understood why deflation is such a bad thing. Sure in larger levels the old arguments deferred consumption kicks in but as lower 1-2% levels this could be a good thing is we have some years of small increases with others offset by smaller decreases. I think govt chases low inflation so hard as it 1) business looks its growing more than it is and 2) helps them manage budgets better. Whereas for the majority a stable situation would be better.
Rainymood 9y ago
Financial stress is caused by people/the system preying on people who can not adequately defend themselves against these predators. It might seem like I have a tinfoil hat on but I honestly believe that people should be protected and safe-guarded for their own good. I once read that more than 50% of Americans start too late with their retirement savings which means that they will have financial stress later on. In contrast, here in The Netherlands you automatically save for your pension if you are employed. I have studied some actuarial science and my god it's quite complicated and you can not expect a simple lay-person to understand the subleties and the complexities of each system. I think it's just a messed up system all round ... people should be protected more.
nicholas73 9y ago
I think most people who work in offices aren't stressed about making it to payday, but just that they'd be in serious trouble if they didn't have their job.

miguelrochefort 9y ago
> We always want more and are never satisfied. That's called the hedonic threadmill. People really should have more self control, live frugally, and become financially independent early. Most developers in the US could retire after just 10 years. Why don't more of them do that is a mystery.
- BOOSTERHIDROGEN 9y ago
  How did you arrive the calculation? Care to explain
  - shoo 9y ago
    Probably something along these lines: http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim... have a play with "networthify" calculator. E.g. hold expenses to 25k / year or less, have income net of tax of 70k and put the surplus into investments that give around 4-5% return after inflation. Repeat for 10 years then retire. keep expenses low in retirement. Luck also helps: this probably assumes you and your family aren't struck by serious medical problems that wipe out savings.
  - miguelrochefort 9y ago
    Assumptions: - You're financially independent once you saved 25 times your yearly cost of living - You earn $150,000/year - You can live on $25,000/year Calculations: - Earn $150,000/year - Pay 40% income tax ($95,000 left) - Spend $25,000 ($70,000 left) - Save $70,000 - Repeat for 10 years (save $700,000) - $700,000 > 25 years * $25,000 = $625,000 These numbers are very conservative, and assume no raise in salary, no interest on savings, no tax deduction or 401k matching, and a is achievable in just 9 years. The key is to live frugally, and the US makes that super easy. To give you some perspective, I earn about $25,000 USD (after income taxes) as a full-time software developer in Canada.
    - icebraining 9y ago
      That doesn't seem conservative at all. I very much doubt the average US developer is making $150k/year for the first ten years of their career. Maybe in some places, but those are also the same where the rent will eat more than half of those $25k.
      - miguelrochefort 9y ago
        It also works if you earn $100,000 and spend $20,000. - $100,000 - $60,000 (40% tax) - $40,000 ($20,000 spending) - $500,000 (10 years of savings at 4% interest rate)
    - BOOSTERHIDROGEN 9y ago
      how hard is for you to live frugally for 10 years and what is your perspective after those 10 years.
      - miguelrochefort 9y ago
        I live on less than $20,000/year, and will continue until I'm financially independent. This is not difficult, if you're rational and don't seek luxury. I sleep on the floor, eat once a day, only buy things on sale and in bulk, choose free entertainment, live in a single room, don't own a car, dumpster dive, etc. Once I'm financially independent, I'll finally be able to do research (which I can't at the moment since I lack a degree).