When an individual's paycheck hits their checking or savings account, those funds must go in various directions. There are bills to pay, trips to the grocery store, and plenty of instances of spending on-the-go. At the end of the pay period, there's often little left to save or fund retirement accounts. Payroll deductions can change that. This service allows for consumers to set up a simple system that directs funds to various accounts automatically, ensuring that saving always happens. All it takes is a simple visit to the credit union to set it up.
How Do Payroll Deductions Work?
Once you set them up, payroll deductions become a no-thought process. When your income arrives, whether it is a paycheck or Social Security, the funds automatically move into the desired account(s). You direct how much money goes to which account.
To set it up, the first step is to establish your savings account, money market account, or other types of investment tools. You can also create accounts for loan payments, such as paying your mortgage or car loan. You are 100 percent able to make decisions based on what is right for your individual needs. The account is programmed to automatically remove a specific portion of each deposit for each of the accounts you set up.
For example, perhaps you want to open a basic savings account for a future vacation. You want to deposit 5 percent of each of your paychecks into that account. When your paycheck arrives, the credit union automatically withdraws that 5 percent and puts it into your vacation fund. You don't have to do anything. Now, if you decided you wanted to save money without such a plan in place, would the money ever really get put aside? Or, would you be tempted to spend it on bills, groceries, or even the coffee shop?
Why Payroll Deductions Matter
Establishing payroll deductions like this has one significant benefit: It's automated. That means you do not have to think about those funds again. For simplicity's sake, consider what would happen if your $2,000 paycheck saw just 5 percent hit a retirement savings account every month. That means that, without thinking about anything, $100 a month would be tucked away for you. And, in this case, it could go to an interest-earning account, building you a sizable investment in the long-term.
Over time, these types of payroll deductions add up. And, as they do, so does your wealth. At the same time, you won't miss the funds. You'll learn to manage the remaining balance from your paychecks according to the amount that's left. In the above example, you'll be able to use the other $1,900 to meet any needs you have. Eventually, you will not notice that lack of $100, but you will notice your increasing investment funds or savings accounts.
Getting Started
We’re ready to help you set up the payroll deductions you need, for just about any need. We can help you put your money to work for you in a more efficient manner. And, over time, you won't have to worry about having the money you need for emergencies, retirement, or even the vacation you want to take.
If you have questions about Payroll Deduction or would like to set up your automatic transfers for your credit union accounts, simply stop by the office or give us a call at 410-687-5240.