A couple of weeks ago, we touched on the importance of having both a checking and a savings account. We mentioned that having your money in two separate places was key to seeing it grow. But what we didn’t touch on was the way your money gets into those accounts in the first place and how that can also contribute to your success in savings.

The vast majority of us (82%) use direct deposit for our paychecks, so what does that have to do with savings? It turns out that it’s more than you might think.

When we fill out the inevitable stack of forms that come with starting a new job, one of those forms is likely to be an authorization for the direct deposit of your paycheck into a bank account. Few people today ever see a paper check, but rather on payday, see an automatic deposit into the account specified on that form.

These forms are usually pretty basic. They ask for a bank name, account number, routing number, etc. The banking basics if you will. However, our campaign to make saving simpler begs the question of whether we could use this process to encourage savings?

What if instead of just those basic account number questions, those forms also asked whether you wanted a certain percentage of (or specific amount from) your paycheck to go into a separate account? Say 5%, 10%, even 20%? You see where we’re going…

Much like our earlier proposal to “Add a Line for Savings” in state income tax forms, we’ve begun to explore whether employees could offer this additional direct deposit line to new employers. And instead of saving with two lines once a year, you’d essentially be doing it every two weeks.

This savings opportunity is a great for a couple of reasons:

  1. First, we’ve written repeatedly that saving is more successful when it’s easy (read: automatic), and also that when we don’t see the money, we don’t miss the money.
  2. This latter point (that we won’t miss the money) is especially the case when are starting a new job; we actually have never had this particular money before, so it’s the perfect time to split a check and increase savings. But, even if it’s not a new job, splitting a paycheck is a new way to save!

From a policy perspective, we could take this a step further. What if every employer included a short graphic pointing out the importance of saving? What if we encouraged employers to promote savings? Or even started our with our own state governments? The public sector, including both state and local governments, employs 71,048 people in Arkansas and 91,036 people in Mississippi[1]. So, we could potentially reach tens of thousands of savers with a very minor change.The #AddaLineForSaving movement grows!

As we prepare for legislative sessions in both Arkansas and Mississippi, we’ll continue to identify new and simple ways to help families save and build wealth for a brighter future. We hope you’ll continue to join us on that journey.



[1] It is worth mentioning that the state and local government employee counts are based on full-time equivalencies (FTE’s), so each full-time job could be occupied by more than one person.

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