Lifestyle Spending Accounts: Everything You Need to Know

The next generation of employee perks.

What is a Lifestyle Spending Account?

A Lifestyle Spending Account, is like a Flexible Spending Account (FSA), but instead of being a dedicated account for out-of-pocket health care costs, it’s an account that puts perk money in the hands of employees so they can get the perks they want and need most.

Lifestyle Spending Accounts (LSA) include perk stipends, which determine the amount, timeframe, and perk categories employees can take advantage of.

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

sam's sample perk stipend

Example of a Lifestyle Spending Account.

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

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

How would you spend your $100 this month?

Companies using innovative perk programs today:

Most companies are shifting towards giving their employees the freedom to choose their own employee perks.

From Airbnb to Facebook to Buffer, below are company culture leaders and their innovative perk programs:


Whether you're creating a perk program from scratch or looking to make significant improvements 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 more benefits.

Learn more about the benefits of Lifestyle Spending Accounts

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The various platforms used by Buffer's team for their $20/month Continuous Learning stipend.

As mentioned above, Buffer offers their employees a $20/month continuous learning perk stipend.

After analyzing their employee's usage of the perk stipend, they noticed that their employees were using many different platforms to learn.

15 unique platforms to be exact.

How could an HR or People Operations professional create a program that supports this diversity of need?

This perfectly illustrates the power of a perk stipend.

Benefits of offering Lifestyle Spending Accounts:

This new approach to employee perks has been gaining a lot of media attention lately because they solve so many common problems of traditional perk programs, and they also address so many trends for the future of work.

So what exactly are the benefits for companies and employees?

1) Flexible for Employer & Employees


2) Easy-to-Manage


3) Strategic & Holistic


Find more in-depth review on the benefits of Lifestyle Spending Accounts here.

When do companies consider using Lifestyle Spending Accounts?

Companies usually begin looking to LSA's when they:



The 5 simple steps to setting up a Lifestyle Spending Account:

Setting up a traditional perk program from scratch takes seven steps and many months to do it right. Lifestyle Spending accounts aren't too far off, but the process is much easier and in the end, employees are much happier.

Follow these 5 steps to set up a perk stipend program:

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

2) Determine how much you'd like to spend per employee per timeframe. Timeframes could be monthly, quarterly, semi-annually, annually, or a one-time basis.

3) Select categories for employees to spend in. These could align with company mission, values, goals, or be 100% open to give employees complete freedom over their perks. Some popular categories include: health & wellness, continuous learning, family, food, and travel. Some of of Compt’s perk stipends (categories in which employees can spend their perk money in) are the following:

4) Set up your program. If you use a perk management software like Compt, this could take 15 minutes. 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 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. Lastly, supercharge your communication plan by creating a forum for people to provide feedback, whether it's a form for them to complete or holding a series of office-hours.


What people can purchase with their perk allowance:

Curious what people actually spend their perk allocations on? We've pulled together some actual purchases from users of our Compt software.

Continuous Learning:


Health & Wellness:


Family:


Want a more comprehensive list, check out our ideas for perk spending page which also includes suggestions for spending.

Want to learn more about Lifestyle Spending Accounts?

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