The Most Underutilized Financial Tool You Already Offer Your Team

Many companies and organizations struggle with how to assist employees in building short-term financial stability. While newer options like employer-sponsored emergency funds can certainly help, most companies already offer their employees an extremely effective savings tool: the ability to split their direct deposits.

This tool is underutilized: only 19 percent of employees who use direct deposit split that into multiple accounts. But when employees do split their direct deposit, the overwhelming majority do so to stash cash in savings; nearly three-quarters of employees who split their direct deposit did so to save money. 

Advantages of Splitting a Direct Deposit

Automation

Splitting a direct deposit is an effective way to automate savings. Automation is the best way to reduce the decision fatigue of deciding how much and when to save. You make that decision once and don’t have to think about it again unless something in your budget changes.

Out of Sight, Out of Mind

While there are other ways to automate savings, such as setting up a recurring transfer from a checking account, saving through a split direct deposit offers a key advantage: you never see that money hit your checking account, so you’re less likely to think of it at all. Instead, the baseline amount of income you base your spending on is only the portion of your income that ends up in your checking account. This is even more effective if you keep your savings at a different bank than your checking account.

Best Practices for Splitting a Direct Deposit

Ease of Use

If employees have the ability to set up and manage their direct deposit on their own through their payroll website, they’ll be more inclined to use it. Having to contact HR to make a change could otherwise be a barrier.

Budget First

Providing your team with the resources and knowledge they need to budget will increase the chance that they choose an amount to save that won’t overtax their checking account.  Our Certified Financial Trainers can work with your team one-on-one to provide a full financial plan or answer their personal budgeting questions.

Issue a Reminder

When someone switches jobs, they may wisely want to know what their full net pay is before considering how much to save. If your employees did not set up a direct deposit split with their first paycheck, they may have forgotten that it’s even an option. Issuing a reminder when your team is already in a financial frame of mind—such as after hosting TFG’s Budgeting Bootcamp webinar—could prompt employees to take action now.

The Financial Gym is a national, personal financial services company with a fitness-inspired approach. Certified Financial Trainers™ work with employees one-on-one via corporate partnerships virtually across the country. 

Want our services at your company? Intro us to your HR or Employee Benefits team so we can help your colleagues and team members! Contact us at enterprise@fingyms.com or submit an inquiry.