The Ultimate Guide to Employee Stipends

An employee stipend is a sum of money given to employees dedicated to cover expenses in categories like health & wellness, professional development, and more.

By Amy Spurling


As the old way of selecting individual vendors for perks becomes less valuable for employees and more administrative-heavy for HR, companies are leaning on employee stipends to solve both problems while further delighting their people.

That's why we developed this guide with everything you need to know about this fringe benefit: stipends.

Here's what is covered in this guide:

  1. What is an employee stipend?
  2. Helpful examples of stipends
  3. Popular types of stipends
  4. Benefits of employee stipends & why they're so great
  5. Best situations to offer them
  6. How to set up a stipend
  7. What do people spend their stipends on?

What is an employee stipend?

First, a definition:

An employee stipend is a sum of money given to employees dedicated to cover expenses for various purposes.

Perk stipends help employers put the money and choice in the hands of employees so they can get the lifestyle benefits they want and need most.

They're also referred to as:

  • perk allowances
  • lifestyle spending accounts
  • specialty accounts
  • lifestyle benefits

They are becoming increasingly popular in today’s work climate because they dramatically improve the process of offering perks for HR team members, streamline accounting and taxability for finance teams, and more importantly, improve the experience for employees. 

sam's sample perk stipend

Here's an example of an employee stipend

In the example to the left, Sam's company has allocated $100 per month to her and other employees to spend on the following perk categories: continuous learning, health & wellness, and food.

This month, Sam purchased books, a gym membership, paid for lunch with her team, and still has $20 remaining.

How would you spend $100 this month?


Leading organizations use stipends to improve employee lifestyle benefits

We're living in the age of personalization. Everything in our daily lives from our Netflix subscriptions to Spotify playlists to iPhones is customized to us and our unique preferences. 

Employee stipends, or lifestyle spending accounts, are the best method for companies looking to introduce more personalization to employee benefits without adding complexity.

Here's a short list of companies using employee stipends:

[Want to see more examples? Check out 63 Examples of Employee Perk Stipends at Leading Organizations.]

unique learning and development stipend purchases

What does typical spending look like?

Check out Buffer's $20/month Continuous Learning stipend

After analyzing their employees' stipend usage, they noticed their people were using many different platforms to learn.

15 unique platforms to be exact.

How could HR create a program that supports this diversity of needs?

This is the power of an employee stipend. 👉


Common types of employee stipends

Below are some of the more popular stipends we see at Compt:

ultimate guide to lifestyle spending accounts

Learn more about the benefits of Employee Perk Stipends

Don’t have time to go through this comprehensive guide right now? That's ok!

You can read this content later but still take advantage of additional information about perk stipends! We like to make it simple.


What makes stipends so great?

This new approach to employee perks has seen a lot of media attention (and attention from HR influencers) because it solves so many common problems of traditional perk programs and it also addresses the trends that are shaping the future of work.

So what exactly are the benefits for companies and employees?

1) Flexible for Employer & Employees

Employee stipends give your team access to the lifestyle benefits they actually want and need.

Pet insurance, in-office yoga, and financial planning services are excellent perks, but often only a small percentage of a team can or will use them. Low utilization burns cash!

Stipends create a flexible, personalized perk experience, and since employees get more control over how they use it, they're more likely to engage. That's a budget win!

2) Easy-to-Manage & Administer

  • Resource-saving

HR is no longer forced into trying to pick the "perfect perk" or perfect vendors with its limited budget and time. Imagine having to sort through 27,000+ vendors to make sure every employee gets what they want...

[Want to see how much your perk vendors are costing you? Check out our Perk Vendor Calculator.]

  • Decrease the administrative burden on HR 

Save time on the implementation side as well as ongoing administrative. Stipends mean less time-consuming and labor-intensive tasks and more automation.

  • Always IRS compliant

Finally, your CFO will be able to sleep comfortably at night knowing your perks are appropriately taxed (if you use Compt, that is). And, they have you to thank for that.

3) Strategic & Holistic

  • Make the most of every company dollar spent on perks

With Lifestyle Spending Accounts, companies no longer experience expired food, wasted event tickets, or under-attended in-office fitness sessions.

  • Encourage a more equal distribution of perks and who they solve for

Happy hour might sound like a great idea, but what percentage of your team actually likes drinks or has the time or desire to attend the event? Avoid usage for the sake of usage. Start saving money and resources by offering more inclusive perks.

  • Better align with company mission, vision, values, and goals

Gain a competitive edge by approaching perks strategically and aligning them with what matters to the business.

Looking for a detailed description of how real Compt customers use Lifestyle Spending Accounts? Click here to learn more.

[Actively comparing various perk vendors? Check out our guide, Comparing Perk Software: Everything You Need to Know]


The benefits of employee stipend management software

If you already offer your team a stipend, awesome! You're ahead of the curve and you're likely experiencing a tremendous amount of the benefits mentioned above. High-five!

However, there's likely a problem you're encountering right now and that is: the admin work.

Unless you're using software to streamline the management of your employee stipend, you're likely spending countless hours managing the following:

  • Questions around which perks qualify
  • Documentation on which categories and vendors apply
  • The approval process workflow once a person purchases a perk
  • The reimbursement process once a perk is purchased
  • The IRS tax compliance of the taxable and nontaxable perks
  • Questions around employees' remaining balances.

If these found familiar, you're not alone. Some companies we've spoken to Compt told us they were spending 20+ hours a week managing these details for a company with less than 200 people. That's 50% of one person's week, or worse and likely more accurate, a percentage of multiple peoples' time invested just on managing the process.

If you feel like the cost of managing the administrative tasks and work is too much to handle, consider implementing a perk stipend management software.


See how Compt's Perk Stipends stack up

The number of software options to manage perks has grown tremendously in the last few years (trust us, we know). We want to help you select the best perks program for you, so we've built this handy worksheet with all the Compt details you need when evaluating vendors.


When do companies switch to employee stipends?

Whether you're creating a perks program or a lifestyle benefits program from scratch or are looking to make updates to an existing one, adding personalization to your perks program can achieve many of the same goals that traditional perk programs do, while giving you (and the rest of your organization) more benefits.

Companies usually begin looking to employee stipends when they want to:

  1.  Offer perks, but lack the time to manage a clunky perks program
  2.  Increase engagement rates with fringe benefits
  3.  Update perks to be inclusive of everyone, not just a few
  4.  Support a distributed workforce
  5.  Decrease the administrative burden to manage perks
  6.  Become IRS-compliant

Help your people get what they need most, not what you think they want.


How to create an employee stipend for your company

Setting up a traditional perk program from scratch takes seven steps and constant tweaking to get it right. Lifestyle Spending Accounts allow for an easier process and happier employees.

Follow these 5 steps to set up an employee stipend program:

1) Identify your current number of employees and your total budget for employee lifestyle benefit accounts.

2) Determine how much you'd like to spend per employee per timeframe. 

Timeframes could be monthly, quarterly, semi-annually, annually, or on a one-time basis.

3) Select categories for employees to spend in. 

These could align with your company's mission, values, and goals, or be 100% open to give employees complete freedom over their perks. Popular categories include health & wellness, continuous learning, family, food, and travel.

Below are some of Compt’s most popularly used employee stipends (categories in which employees can spend their perk money):

4) Set up your program. 

If you use perk management software like Compt, this could take 15 minutes.

Or if you're doing it manually - develop a spreadsheet/form where you can manually track the individual perk expenses, total amounts remaining within each time frame, collect receipts, account for taxes, data for finance, and the status of each perk expense.

5) Last, but not least, communicate it to the team. 

Draft up an email, or better yet, a page on your internal wiki to communicate the new perks plan.

Remember to explain the why, what, when, and how details.

To supercharge your communication plan, create a forum for people to provide feedback. A simple Google form can help or hold a series of office hours.

[Starting with stipends? Check out this detailed guide on how to set up your perk stipend.]


What people buy with their stipend

Curious about what people actually spend their stipends on? We've pulled together some actual purchases from Compt users.

Remote Work Stipend:

  • High-speed wifi
  • Desks, monitors, keyboards (and other items also purchasable through a one-time equipment stipend)
  • Groceries, delivery, and healthy food kits
  • Coffee, teas, specialty sodas, and other beverages 

Continuous Learning: 

Health & Wellness:

  • Gym memberships
  • Yoga classes
  • Classpass
  • Peloton subscriptions
  • Fitbit wearable
  • Aaptiv app
  • Calm app 
  • Massages
  • Acupuncture


  • House cleaning services
  • Dog walking services
  • Babysitting and daycare services (i.e.
  • Museum passes
  • Meal delivery kit (e.g. Blue Apron or Purple Carrot)
  • Fertility benefits

Looking for a comprehensive list? Check out our ideas for perk spending which also includes suggestions from the various other categories.

Amy Spurling

Founder and CEO

Amy founded Compt, employee stipend software that enables companies to offer truly personalized employee perks while being fully tax-compliant and inclusive for global teams. Amy's experience as a former three-time CFO and two-time COO managing Finance and HR drives her belief that companies and employees can achieve much more together when employees are fully supported. Her favorite Compt stipend category is Charitable Giving.


Ready to see how an employee stipend would work at your company?

We're here to talk through your company's current goals and challenges with perks, and see if employee stipends can help you achieve greater success.

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