How and why you should set up split direct deposit

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June 12, 2024 | Ben Heinze

Direct deposit is incredibly convenient, allowing employees to deposit their paychecks directly to their bank account. In fact, 93% of American employees prefer getting their paycheck via direct deposit, according to the American Payroll Association. While direct deposit is great, setting up a split direct deposit between multiple accounts can be even better. Learn how to set up a split direct deposit and the benefits of doing so.

What is split direct deposit?

Split direct deposit takes your paycheck and splits it among multiple accounts rather than all of it going into one account. While not all employers offer split direct deposit as an option, it’s worth considering if you have the option.

You can set up split direct deposit in two ways: By splitting your paycheck by dollar amount or by percentage. When splitting by dollar amount, you can decide on a set amount to be deposited into each account every paycheck. For example, if your paychecks are usually $2,000, you could set $1,800 to your checking account and $200 to your savings account.

This method is straightforward for salary employees who typically earn the same amount per check. If your paycheck varies, payroll systems will generally view one account as your primary account. In this example, if your checking account was the designated primary account and your paycheck was only $1,500, your whole paycheck would go into your checking account.

Alternatively, split direct deposit can be done on a percentage basis. For example, selecting 90% to go to checking and 10% to savings will result in those percentages holding true regardless of how much you earn in any given paycheck.

Keep in mind that the exact mechanics behind split direct deposit vary by employer. Employers may only offer percent or fixed amount contributions, and the total number of accounts you can split your check between will vary. Furthermore, the exact steps to set up your split direct deposit will vary, though it will likely be similar to the steps to set up a non-split direct deposit. If you’re unsure of how split direct deposits are handled by your employer, contact your HR or payroll department.

Benefits of split direct deposit

Automatic savings

Saving money can be difficult, but you can use split direct deposit to automate the process and make it easier. If you want to save 10% of every check, having that 10% automatically go into a high-yield savings account can help keep the money out of sight, out of mind. Many people find it easy to overspend if they have all their money in a checking account.

Stay aligned with your budget

Anything you can do to make following your budget easier is worth considering. Imagine following a 50/30/20 budget, with the 20% savings further broken down into 10% retirement savings into a 401K and 10% into your high-yield savings account. Setting up a split direct deposit to put that 10% into your savings account takes care of that aspect of your budget. Now, you only have to worry about following the 50/30 portions.

Easy to set up and change

While every employer is different, setting up split direct deposit isn’t much more involved than setting up direct deposit in the first place. Other than needing account and routing numbers for all the accounts you want to split your deposit between, the only tricky part is determining exactly how you want to split up your check.

Downsides to split direct deposit

Not all employers offer split direct deposit

If this is the case for you, consider setting up automatic transfers from within the accounts themselves. For example, you could set an automatic transfer of $100 every two weeks from your checking account to your savings account. This is a less direct method than split direct deposit, but ultimately accomplishes the same goal.

Additionally, give polite feedback to your HR or payroll department, asking if split direct deposit can be implemented. Ultimately, companies want satisfied employees, so if enough employees ask for split direct deposit, it could be added as an option.

Less money to your primary spending account

By splitting your direct deposit, you will have less money going to your primary checking account. This makes saving easier, but for many Americans living paycheck-to-paycheck, there may be very little extra money left over to budget around. Make sure you’re splitting your direct deposit in a realistic way to avoid running out of money in your checking account before the next paycheck comes in. You can always transfer money back from savings to checking, but that may not be a good financial habit to get used to, and you may not realize how low your checking account is until it’s too late.

If you haven’t taken advantage of split direct deposit, now is a great time to evaluate your financial situation and consider if splitting your direct deposit between multiple accounts could help you reach your financial goals. Even if now isn’t the right time to utilize split direct deposit, knowing the option exists and how it can benefit you is helpful for your financial future.


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