9 Saving Tips If You Direct Deposit Your Paychecks and Your Salary Is Over $80K
Written by
Cindy Lamothe
Edited by
Elizabeth Constantineau
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It goes without saying that those with higher salaries have a competitive advantage — their buck goes further. If you’re lucky enough to make more than $80,000 per year and have your paychecks directly deposited, then there are many ways to build up a sizable nest egg.
According to Loretta Kilday, attorney and spokesperson at Debt Consolidation Care, you should take a strategic approach. “For starters, consider the option of getting your money from a paycheck into some savings or money market account,” she explained. “While this approach enables your money to begin earning interest from the very first day, it also incentivizes prudent budgeting habits.”
Here are more smart money moves you can make that are backed by experts.
Set Up Automatic Transfers
“If you’re making over $80,000 a year and working with a direct deposit, one of my top savings tips would be to set up an automatic transfer once or twice a month, when your check hits your account, to divert some of that money to a savings account — or multiple,” said David Kemmerer, co-founder and CEO of CoinLedger.
“This has worked great for me personally,” he said. “I have an auto-transfer in place that directs some of my check into my flexible savings account and another chunk into my emergency fund.”
He said this is an excellent and convenient way to stay on top of your savings goals, especially for people who tend to forget otherwise. “And with a healthy salary of almost six figures, this should be something you can manage without risking an overdraft.”
Pay Yourself First
“Pay yourself first. This means adding to your savings before paying your monthly expenses,” said Bethany Hickey, personal finance writer at Finder.
She said waiting to deposit leftover money from your last check right up until your next paycheck lands can mean inconsistent savings contributions — and the temptation to spend all the cash you have leftover.
“If you can swing it, set up automatic transfers to a high-yield savings account around the time you usually get paid for even more earnings with less effort,” she suggested.
Emma Collins, CEO of Trading.biz, specializes in financial strategies tailored for high-income earners and agrees with this method.
“Once your paycheck hits the bank, it’s crucial to have an automatic transfer set up to move a portion of it into a savings or investment account,” Collins said. “This pay yourself first strategy ensures savings growth and reduces the temptation to overspend.”
Open a High-Yield Savings Account
Jake Hill, finance expert and CEO of DebtHammer, recommends high-earners use a high-yield savings account.
“If you are having money from your paycheck directly deposited into a savings account, have a savings account that will make the most out of that money,” he explained. “I’m a huge advocate for these kinds of accounts, because they are essentially zero-risk, high-reward investments. There is no downside to having a high-yield savings account — you simply make way more money from the money you put in the account.”
And if you’re planning to open a new high-yield savings account, check out GOBankingRates’ Best High-Yield Savings Accounts of 2024.
Create a Budget
“I think as you make more money, it can be easy to stop budgeting as rigorously,” said Carter Seuthe, CEO of Credit Summit Consolidation. “But [budgeting] would be my top tip for saving while you’re making $80,000 per year and using direct deposit.”
He noted that a budget is essential even as you make more, since it can help lay out exactly where that check needs to go once it hits your account.
“My general rule for this is to pay your bills first and then pay yourself, which usually entails paying off debt, contributing to savings and, last of all, giving yourself an ‘allowance’ of discretionary spending money,” he explained.
He added that this can help ensure you’re contributing to savings consistently, which is half the battle when it comes to building these habits.
Use the 70/20 Method
Tim Connon, CEO and life insurance agent at ParamountQuote Life Insurance Advisors, recommends putting 70% of your paycheck in your checking and moving 20% of your paycheck into a savings account.
“Savings accounts build interest on your money over time,” he said, “and the majority of expenses require you to spend most of your money upfront for living expenses like food, mortgages, etc.”
He said this is why a small amount should be deposited into savings — so it will build interest — and you will continue to have plenty of money in checking for your basic needs.
Explore Automated Investment Platforms
According to some experts, high earners should look into robo-advisors.
“These platforms can manage your investments based on your risk tolerance and goals,” said True Tamplin, founder of Finance Strategists. “It’s a set-it-and-forget-it way to grow your wealth, especially if you’re not too experienced or interested in picking individual stocks.”
Invest in Your Future
Experts agree that once you’re earning over $80,000 a year, you should consider automatically directing a chunk of your paycheck into a retirement account, like a 401(k) or an IRA.
“If your employer matches 401(k) contributions, at least put in enough to get that full match — it’s basically free money,” said Tamplin.
Collins recommends the same. “Consider allocating funds to a diversified portfolio of investments, including stocks, bonds and perhaps alternative assets. High earners should also maximize their contributions to retirement accounts, such as a 401(k) or IRA, especially if they offer tax advantages.”
Pay Down High-Interest Debt
“Got credit card debt? Make it a priority to pay this down,” Tamplin explained. “The interest rates on credit cards can be brutal. Paying this off aggressively can save you a lot in interest payments and improve your financial health.”
Build Up Your Emergency Fund
Another wise money move, according to Tamplin, is to aim to build an emergency fund in a high-yield savings account.
“A good target is enough to cover 3-6 months of living expenses,” he said. “This fund is your financial safety net for unexpected expenses like car repairs or medical emergencies.”
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