Is Earned Salary Better Than an Advanced Salary? Here’s What You Should Know
Managing finances can be tricky, especially when facing a sudden expense and payday feels far away. Back in the days, asking for an advance on your salary was the only emergency cash option for employees. But lo and behold, there’s a new option that’s gaining its popularity: Earned Salary, also known as Earned Wage Access (EWA). With multiple financial solutions available for employees, which one is better? Let’s break it down into some simple terms.
What is Earned Salary (EWA)?
Earned Salary (EWA), is a financial service that allows employees to “access” a portion of their wages before the official payday. This means that you can access the money you have already earned before payday. This no-loan financial solution is facilitated through a mobile app or platform provided by your employer or EWA Provider.
Understanding Advanced Salary
An Advanced Salary works when an employee “requests” a portion of their upcoming salary before payday. It’s like borrowing from yourself, but you’ll repay it when payday arrives. This option has been available for a long time and usually requires employer’s approval and might involve some administrative hassle.
Comparing Earned Salary (EWA) and Advanced Salary
Let’s jump into a quick comparison to help you understand the differences:
| Key Comparison | Earned Salary (EWA) | Advanced Salary |
| Access to Funds | Access to money you’ve already earned, no debt involved | Borrow against future earnings, which creates debt |
| Approval Process | No employer approval needed for each transaction | Usually requires employer approval for each advance |
| Repayment | No repayment needed; receive the remaining balance on payday | Advanced amount is deducted from future paycheck |
| Cost and Fees | Minimal fees that is generally comes with lower costs | May involve fees or interest, depending on the provider |
Why Earned Salary (EWA) Could Be the Better Option Today
With Earned Salary (EWA), you have the upper hand in accessing money you’ve already earned, and there’s no debt involved. It offers quick access to wages, usually without requiring your employer’s approval. Since it’s not a loan, you’ll receive the remainder of your paycheck in full on payday, rather than having it reduced by an advanced salary.
When Is an Advanced Salary a Good Option?
In some cases that an employer does not offer EWA services, an Advanced Salary can be a good alternative. It’s also useful if you need a larger amount than you’ve currently earned. Despite involving borrowing against future earnings and requiring employer approval, it can address urgent financial needs when other options aren’t available.
To Wrap Up
If your employer offers Earned Salary (EWA), it is a better option than taking an Advance Salary. It’s faster, less stressful, and doesn’t impact your payday. However, if EWA isn’t an option at your company or you need a bigger chunk of money, an Advanced Salary can be a good backup plan. At the end of the day, the goal is to ensure you can access your money when needed, without unnecessary stress.