Building a Low-Cost Emergency Savings Program for Your Employees: The Benefits of Split Deposit

By Charles Knuth · March 15, 2024 · 5 minute read

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Building a Low-Cost Emergency Savings Program for Your Employees: The Benefits of Split Deposit

As an HR or Payroll Executive, you have the power to impact your employees’ financial well-being positively. Bankrate’s 2024 Annual Emergency Savings Report reveals a concerning reality: Over two-thirds of Americans worry about having sufficient emergency savings to cover just one month’s living expenses. To make matters worse, a staggering 57% of adults are unable to afford a $1,000 emergency expense. These statistics highlight that many individuals are not saving enough for their future.

However, there is a straightforward solution: encouraging employees to use your payroll’s split deposit feature. This simple (but often forgotten) payroll option allows employees to automatically divide their paycheck into multiple accounts, such as a checking and a savings account, making it easier for them to save consistently.

Leveraging the split deposit feature empowers employees to allocate a portion of their earnings into a savings or investment account with each pay period — before it even reaches their primary account. For instance, an employee can choose to have a set dollar amount each pay cycle (say, $15) directly deposited into a dedicated emergency savings account, while the rest is allocated to their day-to-day bank account. Alternatively, they can allocate a percentage of their pay, such as 2%, for their emergency savings and the remaining 98% for their primary account.

Split deposit offers a range of advantages, including automated savings, flexibility, reliability, and liquidity. It also enables employees to effortlessly and efficiently work towards their short- and long-term savings goals. For example, an employee who receives weekly pay and sets aside just $10 per pay period would be setting aside $780 in savings over a year. By leveraging bank accounts over other financial instruments, employees retain relative liquidity and access to the funds when needed.

Benefits of Promoting Your Payroll Split Deposit Feature

Here’s a closer look at some of the benefits of bringing the split deposit payroll option to the attention of your workforce.

1. Promotes Long-Term Savings

By encouraging split deposit, you are empowering your employees to prioritize their long-term financial goals. Whether saving for retirement, a down payment on a house, or their children’s education, a split deposit ensures that a portion of their paycheck is automatically directed towards these goals. This consistent saving habit can help employees build wealth and financial security over time — getting them another step closer to achieving their financial aspirations.

2. Builds Emergency Savings

One of the most significant benefits of split deposit is its ability to help employees build emergency savings. Unexpected expenses can arise at any time and having an emergency fund can provide a financial safety net. Employees can gradually build up their emergency fund by automatically allocating a portion of their paycheck into a separate savings account without even thinking about it. This can alleviate financial stress and provide peace of mind during challenging times.

Recommended: How Much Should Your Employees Have in Emergency Savings?

3. Reduces Financial Stress

Financial stress can have a detrimental impact on employees’ overall well-being and job performance. By encouraging split deposit, you are helping employees take control of their finances and reduce their financial stress. Knowing that they have savings set aside for emergencies and long-term goals can provide a sense of security and stability, allowing employees to focus more on their work and less on financial worries.

4. Enhances Employee Retention and Engagement

Promoting split deposit as a benefit can significantly enhance employee retention and engagement. Employees who feel supported in their financial goals are more likely to stay with the company long-term. Additionally, the peace of mind that comes with having savings can improve overall job satisfaction and productivity, leading to higher employee engagement levels.

5. Supports Financial Wellness

By promoting split deposit, you actively support your employees’ financial wellness. Financially secure employees tend to be happier, healthier, and more productive. You are contributing to their overall well-being and fostering a positive work environment by providing them with the tools and resources to save effectively.

Recommended: Measuring the Financial Well-Being of Your Workforce

6. It’s free!

Even if your organization is not ready for a full-scale emergency savings program, leveraging your payroll systems’ split deposit feature is a cost-effective way to get started. This is a tool you already have in your arsenal, and one that your HR team and employees are likely already familiar with.

Tips for Communicating Your Payroll Split Deposit Feature

Implementing effective communication techniques is crucial in driving employee participation and, more importantly, changing their savings behavior.

Coordinating communications about the significance of emergency savings with other financial well-being education programs can help spread the message, and help employees connect the importance of emergency savings with attaining their other financial goals.

To ensure clarity, accompany the rollout with explicit communications that provide employees with clear expectations, including:

•   A detailed explanation of how to split payroll deposits across multiple accounts

•   Clear information and examples of how similar employees or savers have leveraged the payroll split deposit feature

•   Access to calculators, tools, and educational resources to assist employees in determining their savings goals

•   Thorough explanation of any company match offered, including the amount, frequency, and portability (most applicable to organizations promoting “in-plan” emergency savings accounts)

Recommended: 3 Ways to Support Your Employees During Times of Uncertainty

The Takeaway

Building an emergency savings program for your employees through split deposit can profoundly impact their financial well-being. You can help employees build long-term wealth and establish a financial safety net by encouraging consistent savings and providing the necessary resources and support. Remember, financial security leads to happier, more engaged employees, ultimately benefiting your organization.

SoFi at Work can help. We’re experts in the employee financial well-being space. With SoFi at work, you can access platforms and information that will help build the benefits needed to create a successful and loyal workforce.


Photo credit: iStock/dragana991

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