Hardship Recovery

Why Direct Deposit Is A Must If You Want To Start Saving

It takes a lot of discipline to stash away cash and save instead of spending it. Thanks to direct deposit, such control isn’t necessary.


This relief program will direct deposit a short term loan into your bank account.

Review the terms of this funding closely before accepting these funds.

The more automated your savings are, the more likely they are to grow. Why? Well, manually putting away money for an emergency fund or down the road takes loads of discipline, especially with so many ways to spend it.

How can you automate savings? On a small scale, you can use apps that will transfer change debit purchases to a savings account. You can schedule monthly transfers from your checking to savings, too, if you’re looking to put away more.

While those options certainly work, there’s another option that takes less time and takes the responsibility of saving out of your hands: Direct deposit from your employer.

The company you work for may have a direct deposit feature that you’re not taking advantage of. According to a 2015 NACHA survey of 2,000 workers, 82 percent used direct deposit. Of that group, however, only 24 percent divided their direct deposit between multiple accounts. In other words, nearly three out of four failed to use it to save.

The Purpose of a Split Deposit

What can you use a split deposit for? The most common use is to build an emergency fund, which is a good idea in case you have a loss of income or unexpected medical bills one day.

You could also use a split deposit to grow a savings account for a specific purpose slowly. For instance, you may want to buy a new home in the next few years or purchase a car. You could add to that savings account via a split direct deposit through your employer.

Does a split deposit have to go to a savings account? No, as you could redirect some of your paycheck to another checking account for spending purposes.


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If you think a direct deposit isn’t necessary to save, you may be right if you have strong financial discipline. What if you don’t, however? By eliminating the need to choose what to do with your money, direct deposit instills the discipline for you.

How to Set up Direct Deposit with Your Employer

When you’re ready for direct deposit to start stacking your savings, contact your company’s human resources department. You may be able to set it up online, or you’ll have to fill out some forms.

You’ll probably need to have certain pieces of information handy when making the switch. Your account and routing numbers will be required, and some cases may require a voided check to complete the process.

If your pay varies from time to time, you can ask for a percentage of it to be used for direct deposit instead of an exact amount. Doing so will ensure you have enough left in your checking for bills and other necessities if a period pays less than usual.

To help you reach your savings goals, here’s a little trick that seems to help many people: Naming your savings account.

For example, you may have a savings account saved up for a special vacation with your partner. Name it “Vacation Fund” to give it an actual purpose and identity. In doing so, you’ll label it with a goal you’d like to reach, which may motivate you to save even more.

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