For some Americans, the pandemic quickly brought home an unpleasant fact about their savings: they don’t have enough.
It’s a subject that gets part of the spotlight each year during America Saves Week, which Nacha is proud to participate in. In 2022, America Saves Week is Feb. 21-25. Nacha is particularly focused on Monday, Feb. 21, 2022, when the daily theme is Save Automatically.
Getting into a savings regiment can be difficult. “I’ll put some aside next week,” quickly becomes next month, before it becomes never. But when you save automatically, it’s much easier, and the way to do that is with Split Deposit.
Split Deposit is basically Direct Deposit with a twist. Just tell your employer you want to save a certain percentage or fixed amount each payday, and they’ll direct that money to savings. After you fill out the initial form you don’t have to lift a finger.
In its “Economic Well-Being of U.S. Households in 2020” report issued in May 2021, the Federal Reserve found that if faced with a surprise $400 expense, 64% of Americans would pay it using savings, cash, or a credit card paid off at the next statement.
As for the rest, options cited included paying off a credit card over time, borrowing from relatives, or seeking payday loans. But the Fed noted that “12% of all adults said they would be unable to pay the expense by any means, matching that seen in 2019.”
That’s a big problem, especially if the $400 is for something urgent, such as medical care, or fixing the car that gets you to work. And it amplifies the need to encourage Split Deposit. Just setting aside $20 per pay period becomes $520 a year for anyone paid bi-weekly.