Direct deposit is a fast, convenient, and secure way to receive your paycheck. Some banks and credit unions offer early access to funds up to two days before payday.
Getting your money a few days earlier can reduce stress and help you avoid late fees. Splitting your direct deposit into multiple accounts, like checking and savings is easy.
Pay Your Bills on Time
The reasons you’re living paycheck to paycheck can vary, from low wages to high housing or food costs to student loans and other debts. But whatever the cause, getting in the habit of paying your bills on time can have both short and long-term positive effects.
Start by reviewing your spending habits. Pull up your bank and credit card statements from the past three to six months and examine them line by line to get a clear picture of where your money is going each month. It may be eye-opening at first, but it’s essential to understand why you’re in your situation and how to get out of it.
Once you have a better sense of your spending patterns, it’s time to take action to improve your bill payment habits. Paying your bills on time is key to breaking the paycheck-to-paycheck cycle. Using payment solutions like Wisely makes it easy.
You can start by setting up automatic payments through your bank or the biller, so a predetermined amount is withdrawn on the same date each month. It’s also a good idea to review your due dates and ensure they match up with when you typically receive your paycheck so you don’t run into issues with late fees. Some banks even offer early direct deposit for free, so your paycheck is available up to two days before the typical payday.
Build Your Savings
The best way to break the paycheck-to-paycheck cycle is by building your savings. It can take a little discipline, but the more you save, the easier it is to reach your goals. You can also set up automatic contributions so a certain amount of your paycheck goes straight into savings.
The goal is to build enough of a cushion to afford to pay your bills even if a problem with your job or a major unexpected expense comes up. This can prevent you from incurring overdraft fees or missing payments that add up over time.
When paid via direct deposit, your money is available to you before payday. This is much more convenient than receiving paper checks, which can be time-consuming. Plus, you won’t have to worry about lost or stolen checks.
If you’re a Jolt member, you can get your paycheck up to two days early*. This can help you pay bills faster and say “yes!” to that night out. And you can always set up a separate savings account to save for what you want in life. Whether for a vacation or buying a new couch, you can start small and increase your contributions as you become more successful with your savings habits. It’s like the flight attendant’s line about putting on your oxygen mask before helping others — you must save for yourself first.
Avoid Overdraft Fees
Many people need help to make ends meet because their take-home pay doesn’t match or exceed their expenses. Even if they can afford essentials like housing, food, daycare, and transportation, their paycheck often falls short of covering other necessities such as utility bills, subscriptions, and emergency expenses such as car repair. These situations often lead to overdraft fees, which can be costly and add up quickly.
To prevent overdraft fees, you can use your bank’s online or mobile app to pay bills and fixed expenses automatically. This ensures timely payments coinciding with your paycheck. Additionally, using cash instead of debit or credit cards can reduce overdraft fees as studies show that people spend 12 to 18 percent more when using plastic.
Another way to avoid overdraft fees is by checking if your bank offers early direct deposit for checking accounts. If you choose this option, transfer funds from your savings account to your checking account before making any purchases to avoid costly overdraft fees.
Avoid Late Fees
Direct deposit is the fastest and safest way to receive your paycheck. With it, your money is sent electronically to your bank or credit union, meaning you can access the funds a few days before your payday. And since checks can be lost or stolen, many employers and banks will work with you to replace them if they arrive after your payday.
But what if you could get your money even earlier? Early direct deposit is a new service available through some banks and financial apps, including Chime. It gives you early access to your direct deposit funds up to two days before the scheduled payment date (the exact amount of available funds depends on the timing of the ACH submission from your payer).
This new banking feature aims to help customers avoid late fees, especially on bills due around when they are paid. This can be a major stressor for people who live paycheck to paycheck. Late fees can add up to thousands of dollars throughout a career.
Signing up for early direct deposit is easy by giving your employer your account information, which can be found on the bottom of a check or online banking. You can also fill out a form at your place of employment or get a direct deposit form from your human resources department.