To face the January slope, the on-demand salary is an alternative

By using the salary advance it is money for which you already worked, this makes you become more aware of your way of consumption and at the same time more responsible, since it is about your own money”.

Oliver Babini, CEO of DEY.

During the first weeks of the year, many Mexicans suffer the January slope, an economic phenomenon caused by the mismanagement of personal finances during the December holidays, which together with the updating and increase in prices of products and services will make it much more complicated. the beginning of the year.

The truth is that 2023 is dragging inflation that reached all-time highs last year, and that, according to the Bank of Mexico (Banxico), it is estimated that it will be until 2024 when inflation returns to the three percent target.

People who have their finances in order will have a less chaotic start to the year, but those who do not have healthy finances could face a lack of money in the first months. An option to mitigate the January cost without resorting to credit is the payroll advance.

The on-demand salary service is a financial liquidity scheme, the model consists of alliances between fintech companies and companies so that workers can access their salary instantly through the app of the financial institution.

Being money from the salary worked, it belongs to the worker, so it is not a credit in which interest is paid, since it is an advance salary. On the day of payment, the amount of money advanced is delivered to the fintech and the remainder to the payroll account of the people who had an advanced salary, in addition to the payment of a commission which may vary depending on the financial institution.

Oliver Babini, CEO of DEY, a fintech focused on salary on demand in Mexico, explained that, unlike requesting a loan to obtain liquidity, salary on demand is a product that only grants the resources that the worker already has for which reduces the risk of falling into over-indebtedness.

Identify how to use it

One way to use the payroll advance intelligently is to identify the type of expense for which the money is required and not request more than is necessary. Aroldo Dovalina, CEO of Paynom, recommended requesting up to a maximum of 40% of the salary. that is expected to be received, since requesting more money can cause a financial imbalance.

To avoid this, it is recommended that at the same time requesting a payroll advance to have more liquidity, an evaluation of financial health begins, since the lack of money before reaching the end of the month or fortnight is an indicator of a bad situation. managing our finances.

For this reason, it is necessary to check if the need for liquidity corresponds to an extra expense that has been made eventually or if more is being spent than what is earned on a constant basis, this can help us to give us an idea about what type of alternatives there is to improve our financial health.

According to BBVA, the payroll advance is a short-term solution tool in case of having an extra expense on some occasion or to avoid the collection of surcharges and fines for not paying on time and properly, therefore it is advisable not to use it as a form of long-term financing.

Help your credit score

Using the payroll advance responsibly as a financial solution in the event of having an extra expense or to pay for services and avoid charging surcharges can not only help you get out of trouble, but also generate a good credit score, since that some financial entities that offer salary on-demand report the behavior of their users to the credit bureau.

According to data from the fintech DEY, at least four out of ten people have managed to obtain bank loans by improving their credit score through this tool.

joselyn.ugarte@eleconomista.mx