Many credit unions offer salary deduction, allowing you to save and borrow in an easier and more secure way. Find out more about how salary deduction can help you to manage your money in the article below.
Credit unions offer a range of benefits to their members which other financial providers do not traditionally offer. One of these unique benefits is something called salary deduction.
Salary deduction offers an easy and secure way of managing your finances in terms of saving and borrowing. This article will explain what salary deduction is, how it works, and why it is so useful when it comes to managing your money.
What is salary deduction?
Salary deduction is simply a process where money is taken from your gross pay each time you get paid. This can be either for mandatory or voluntary reasons.
Your mandatory deductions must be taken every time you get paid. This can be for things like tax, student loan repayments, and pension contributions. Your voluntary salary deductions are additional contributions you choose to make. Insurance premiums, retirement plan contributions, or salary sacrifice schemes to purchase an expensive item are all examples of voluntary deductions.
Many credit unions will partner with employers to set up salary deduction schemes for their employees. This enables you to save and borrow with payments direct from your salary.
How does salary deduction work?
At Serve and Protect Credit Union we offer salary deduction with employers across the Police, Prison and Probation, Armed Forces, Fire and Rescue, and Health and Social Care sectors across the UK. You can save and borrow with deductions from your salary if you work for an employer who offers salary deduction with Serve and Protect, also known as a payroll partner.
By becoming a member of Serve and Protect you will need to save a minimum of £10 per month into your Regular Saver account. If you are are employed by one of our payroll partners, you will firstly have any mandatory deductions taken from your gross pay. After this, your savings deduction is taken from your gross pay and into your Regular Saver. You will then receive your net pay, which is what remains after your deductions are taken.
If you have taken out a loan with Serve and Protect, your agreed monthly loan repayment will also be taken as a deduction before you receive your net pay.
Why is salary deduction useful?
An easy way to save
Firstly, saving via salary deduction makes it easy for you to save money. The most difficult thing about saving money is getting started. However, by becoming a member of a credit union and saving from your salary every month, the hard work is done for you.
If you find it difficult to manage your money and prioritise saving, saving directly from your salary means you can save money before you get the chance to spend it. This can help you to save regularly while giving you the confidence to spend the money you take home, as your savings contribution has already been taken care of.
This also means that your savings gradually grow in the background over time. If ever you experienced an unexpected expense and your financial resilience was tested, you have the funds to fall back on.
A secure way to borrow
Secondly, salary deduction reduces the financial stress of managing your loan repayments. Managing multiple repayments every month can be difficult. Knowing that one repayment is automatically taken care of every month can be a comforting thought.
Missing a loan repayment can cripple your credit score for up to 18 months. Repaying your loan straight from your monthly wages means that missing a repayment is almost impossible and your credit score won’t be damaged.
Get started with salary deduction
At Serve and Protect, we offer salary deduction with employers across the UK, providing an easy way to save and a secure way to borrow straight from your salary. Become a member today for free here.
If your employer is not a payroll partner with Serve and Protect, you can refer them here to let them know you would like to access this free employee benefit.