Advance your payroll intelligently

Suffering from lack of liquidity, every fortnight or payroll, is something frequent among the Mexican population. According to data from the Global Investor Pulse survey, money is the main cause of stress in the country.

The Mexico Financial Well-being 2022 report, prepared by Invested, shows that workers spend an average of about 15 hours a month worrying about financial issues, among the main causes are economic dependents, debts, medical expenses and day to day.

In addition, the consulting firm Mercer indicates that one in 10 workers feel overwhelmed by their financial situation or their debts, while 72% of them report that they live on the edge between fortnights. Given this scenario, there are multiple financial products that can help cope with expenses and economic contingencies of the workers, among them the payroll advance.

Also known as salary on-demand service, it is a rapid financial liquidity scheme that allows entities such as Minu, Castor, Klink, Pulpi, Monto, Dey or Paynom to make alliances with companies to offer loans that are directly linked to the amount of the payroll of the employee.

Through this financial model, workers can immediately access their salary or a proportional part, depending on the financial entity to which they pay a commission that goes from 39 to 59 pesos, when the day of payment arrives, the amount borrowed is held.

The payroll advance, the advance is proportional to your salary, whether daily or periodic, and allows you to pay for basic necessities such as electricity, water, telephone or an airtime recharge” explained Aroldo Dovalina, CEO of Paynom.

When to request a payroll advance

The Mexican population obtains informal credit through family or acquaintance loans; It is mainly used for household expenses, food, payment for services, medical expenses and emergency care, according to data from the study: “Credit in Mexico: products, instruments and evolution”, prepared by the Banking and Securities Commission (CNBV) .

The payroll advance service is designed as a pocket ally for workers who seek liquidity for this type of destination, because it allows users to access a financial product suited to their economic needs and prevents them from acquiring a loan from higher amount that could produce an over-indebtedness.

“Many times you have the need to pay something less than 1,000 pesos, but you have access to a credit of 5,000, the institution encourages you and you end up taking it, with the payroll advance you only take what you need to cover the financial need” explained Aroldo Dovalina, CEO of Paynom.

On the other hand, Oliver Babini, director of DEY, explained that the on-demand model is a tool that avoids cuts or surcharges when exceeding the payment deadline for services.

“The rate of people who end up paying for services such as electricity, water, telephony after the deadline is very high because the payment dates do not coincide with the fortnight and they end up paying surcharges that they should not,” emphasized the DEY manager.

Institutions such as BBVA classify the on-demand service as a short-term financial solution, so it is recommended to use it in a timely manner for some unforeseen financial event and not see it as a method of financing in the medium or long term.

The payroll advance service is a good alternative to obtain liquidity, however to access financial well-being it is necessary to plan the destination of the income, this action will facilitate savings and the formation of an emergency fund which can face an unexpected situation without destabilizing finances.

The Invested study points out that 47% of the population is aware of their expenses and 59% knows the total breakdown of their income. While the percentage of people who do not have an emergency reserve or this may be insufficient, it is considerable, representing 28.10% while 20.90% have a month or less of reserve.

On the other hand, 41% allocate between 20% and 50% of their monthly income to paying debts and only 13% declared they had no debt.

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