A realistic savings strategy with clearly defined goals is an important aspect of financial peace of mind. Whether you’re saving for short-term goals like a dream vacation or long-term objectives like homeownership, choosing a savings account with features that align with your defined goals is key. Once you’ve researched and selected a savings account, you can use direct deposit to automate regular contributions to the account.
In this guide, we’ll explore how you can use direct deposit to optimize your savings process, particularly when you link to a high yield savings account (HYSA).
What is direct deposit to a savings account?
Direct depositing into a savings account involves routing a portion of your regular income directly into your savings account. This automated process eliminates the need for manual transfers, making it easier to maintain a consistent and disciplined approach to saving. Most employers provide employees with an online portal where they can modify and customize direct deposits of their paycheck whenever they need to.
Budget-savvy professionals often take advantage of direct depositing to savings as part of a “pay yourself first” approach to finances, so that you’re allocating the money to your personal savings before it ever hits your checking account (where you might be tempted to spend rather than save).
Can you direct deposit into different types of savings accounts?
Depending on your goals and circumstances, you may have a need to maintain – and regularly contribute to – more than one type of savings account. By utilizing direct deposit, you can automate contributions to multiple savings accounts and potentially save yourself time.
Whether you prefer the accessibility of a traditional savings account, the flexibility of a money market account, or the high interest potential of a HYSA, you can use direct deposit to set up different recurring deposit amounts across your accounts.
Benefits of direct deposit to your HYSA
Using direct deposit with a HYSA has multiple potential benefits, including:
To learn more about HYSA direct deposit benefits, visit our resources:
How to set up direct deposit into your HYSA
Setting up direct deposit to a HYSA typically involves using your employer’s online payroll portal or coordinating wth the payroll department to route either a specific recurring amount or percentage of your paychecks directly into your HYSA.
The main steps for starting direct deposit into a HYSA are:
- Choose a HYSA: Research and select a HYSA that aligns with your financial goals and preferences. For information about setting up a Laurel Road High Yield Savings Account, visit our HYSA FAQs page.
- Determine your direct deposit amount. Determine a realistic recurring savings deposit amount based on your financial goals. The amount could be defined as a specific dollar amount or a percentage of your paycheck.
- Gather account information. Obtain the necessary details – including the account number and routing number – from your chosen bank.
- Update your payroll information. Login to your employee benefits portal or contact your employer’s payroll department to update your direct deposit information and provide the necessary details of your HYSA to ensure a seamless setup.
How much should you direct deposit to savings?
The right amount to direct deposit into your savings depends on your budget and goals and isn’t permanent – you can adjust the amount at any time.
As you think about how much you want your savings direct deposit amount to be, you might consider the 80/20 rule – the idea that you should save 20% of your income and reserve 80% for your needs and wants. For help assessing your financial goals, budget, and savings objectives, visit these resources:
Tips for maximizing your HYSA savings
In tandem with using direct deposit, you could maximize your savings – and optimize the process of saving each month - using the following tactics and strategies:
Laurel Road HYSA with direct deposit
Coupling direct deposit with the compound interest potential that comes with a HYSA, like the one offered by Laurel Road, could be a powerful way to accelerate your savings goal timeline. With competitive interest rates, user-friendly features, and seamless direct deposit integration, a Laurel Road High Yield Savings account could jumpstart your savings goals. Use this calculator to see how much you could save over time by making different direct deposit amounts into a Laurel Road High Yield Savings account:
Learn more about how to set up direct deposit to a Laurel Road High Yield Savings account here. For more guidance on designing a savings strategy that meets your needs, see our Building Your Savings content collection.
