To continue enjoying all the features of Navy Federal Online, please use a compatible browser. You can confirm your browser capability here.

Bottom Line Up Front

  • Splitting your deposit is a vital method to use when you’re trying to save money, whether for your emergency fund or for a fun vacation.
  • If you don’t have an emergency fund, even a small amount of money set aside from every paycheck can help you grow one faster than you’d think—especially with accounts that earn dividends!
  • You can automate your savings on payday even without having direct deposit. 

Time to Read

5 minutes

May 12, 2022

“A man who both spends and saves money is the happiest man because he has both enjoyments,” said English wit Samuel Johnson. But how to spend and save? We’ve figured out an answer: Splitting your deposit is a good place to start. 

How can splitting your deposit help you reach your goals?

Splitting your deposits is a way to manage your direct deposits. When you’re setting up your direct deposit through your employer, you can elect to split the money into two different accounts. It’s a great way to pay yourself first and build your savings. When you split your deposit, it’s easy to make saving money a habit because you’re:

  • paying yourself first. You’re putting aside money for you and your future. Bonus pro tip? Don’t forget to factor in your actual retirement savings when you’re splitting your deposit. If your employer offers a match, take advantage of it! 
  • automating the process. You don’t have the hassle—or the choice—of remembering to transfer money into a savings account. 
  • keeping savings out of sight and out of mind. Since your savings are in a separate account, you can’t inadvertently spend them. (At Navy Federal, we even have a feature that allows you to hide accounts you’d rather not see regularly.)
  • putting your money to work for you. Typically, savings accounts earn more interest than checking accounts. So not only are you adding to your account with every paycheck, but dividends are also accruing. 

How much should you be saving?

Any amount you can set aside—even a few dollars a month—can be a welcome resource when life’s emergencies arise. A 2021 report issued by the Board of Governors of the Federal Reserve System found that more than 25% of people were one $400 unexpected expense away from not being able to pay their monthly bills. In fact, 35% of survey participants would have had difficulty paying for the $400 expense at all.

But if you put a deposit of $40 a month into savings, you’ll have a $400 safety net in less than 1 year.  Increase the savings to $40 every paycheck—assuming you’re paid twice a month—and you’ll have $400 in less than 6 months. 

Whether you’re saving for vacations or trying to get your emergency fund off the ground, there are many ways to save for both goals. You can give yourself an advantage if you open accounts  for each specific purpose. For example, you want your emergency fund to earn dividends and remain accessible, although possibly out of sight, while you may not emphasize the dividends a vacation fund earns but prefer it to stay visible to you so you can track your progress. 

Now, to determine how much you can afford to save every month, consider your monthly necessities first. Think about your rent or mortgage payment, groceries, utilities and car payment. Once you know you have the essentials covered, you can decide how much to channel into savings. Or, alternatively, you could simply pick a monthly savings goal you feel comfortable meeting. After a month or two, try bumping up that amount and saving a little more. Keep repeating that process!

Don’t be discouraged if the amount seems small. The point is to start the savings habit. With time, you’ll have the satisfaction of seeing your savings accumulate. Then you can turn your attention to expanding your safety net—experts often recommend having at least 3 months of living expenses set aside—or focus on additional savings goals.

How do you set up a split deposit if you have access to direct deposit?

You can establish this habit of saving in just a few simple steps.  First things first: Find out from your employer if you have access to direct deposit. If you don’t, not to worry—you still have options! (More on that in a moment.)  You can also learn more about setting up direct deposit at Navy Federal Credit Union’s guide to direct deposit

Follow these steps whether you’ve already set up your direct deposit and didn’t split it then or you’ve yet to set it up:

  1. Open a savings account if you don’t already have one. It’s a good idea to keep your savings in an account that’s accessible and earns dividends. Navy Federal offers a variety of savings vehicles, including a basic savings account for those who are just getting started.
  2. Set up split deposit. Start by traveling to our Direct Deposit page to set up split deposits, if you’re with Navy Federal. If you bank with a different institution, ask your employer and your bank what this process entails. With Navy Federal, as you’re setting up your direct deposit, you’ll be asked to designate a percentage of your paycheck that you want to go into your checking or savings account. The amount that remains will be diverted to the account of your choosing. The rest of the instructions are basically to fill out a form and have your employer sign it, but don’t worry—you’ll be clearly told what to do during the process.

    Note: For our military members, the process can look a little bit different. Members can achieve a split deposit by adjusting their LES on the DFAS MyPay website  to create a direct allotment to a savings account. 
  3. Give yourself a high five and enjoy knowing you’re building financial security.

How do you set up a split deposit if you don’t have access to direct deposit?

Not every employer offers direct deposit. But you can still automate the savings process by setting an automatic recurring transfer from your checking account to your savings account. Don’t forget to set it for a few days after payday to make sure the funds have had time to clear! Navy Federal makes it easy to set up automatic transfers from your checking to savings through our mobile app* or online. 

Next Steps Next Steps

  1. Check out our guide for direct deposit for more information on setting up direct deposit so you can enjoy the habit of saving money.
  2. Step back and review your budget so that you can identify where you’re overspending and determine how much you can afford to save per paycheck. (Or, try starting with a small amount and increasing it incrementally every few months.)


This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.