The following is a post by MPFJ staff writer, CJ, who blogs at thesingledollar.com about personal finance, budgeting, frugality, and debt repayment.
We’ve all been there: it’s payday, we’ve got rent to pay and food to buy, and for one reason or another, the money’s not where it’s supposed to be: in our bank accounts! This is a really stressful situation, but it’s not as uncommon as it should be, so it’s good to have a plan in case it happens to you.
Protect Yourself First
If you don’t have your paycheck on time, the very first thing you need to do is make sure the situation won’t get worse. If you have enough money in savings, move that over to your checking account right away. But if you’re living paycheck to paycheck, you may have to take more drastic steps. For example, if you have an auto-draft set up on your bank account, you might need to cancel it. If you’ve already written a check, you might need to ask someone not to cash it yet, or you might need to ask your bank to stop the check (in other words, not cash it). Be careful with that last option, since there will probably be a fee — but it might be worth it to you to keep from going into overdraft. You’ll have to check your terms of service carefully to determine what to do. If you’ll have to be late on rent or some other vital bill, call up your landlord or service provider and explain the situation. Ask for a grace period so that you don’t have to pay a late fee.
Determine Why This Happened
There are many reasons your paycheck might be late. It could be because of a malfunction in an automated system; because of a bank holiday or something similar that prevents the check from clearing when you expect it to; or, more worryingly, it could be because your employer doesn’t have the money to hand. If it’s a mechanical or system error, it’s probably nothing to worry about for the future (unless it happens again!), but if your employer is short of cash, that is a major issue. Like these workers in Chicago who had frequent issues with late pay, you’ll have to use your judgment to determine how to respond.
Decide How to Respond
If your employer has been trustworthy in the past, you might be willing to let it slide. But you should let your manager know that it’s a big deal if you don’t get paid on time. Late paychecks may indicate that the company is in real trouble. If your paycheck is only a day or two late, this might not an issue, but in more extreme cases, employees have had to sue for breach of contract in order to receive back pay. Keep a careful eye on anyone who’s paid you late even once…and it can’t hurt to keep an eye out for another job.
We all hope that employee-employer relations are smooth and that, when we work as agreed, we’re paid as agreed. But since it’s not a perfect world, things don’t always go as planned. If a late paycheck is an occasional part of your financial landscape, you should be able to respond swiftly to keep the situation from getting out of control.
How about you all? Have you ever had to deal with the unfortunate situation of a late paycheck from your employer? If so, how did you deal with it while trying to maintain good ties with the employer?
Share your experiences by commenting below!
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