How To Pay Yourself Automatically

Paying yourself first means moving money into savings and investing before you spend on anything else. It’s a rule almost nobody disagrees with and almost nobody sustains by hand, because it depends on you making the same decision every month.

Automation can help with that, then it becomes more of a setup problem than a discipline problem. This guide covers three places where automation can be applied, how to split a direct deposit so part of your pay never lands in the account you use for daily expenses, what to do if your employer doesn’t offer a split, and when to revisit the whole arrangement. 

What paying yourself first actually means

Paying yourself first is about the order, not amount. Your savings and investing come out of your paycheck first, and your spending happens with whatever remains. It helps you prioritize your future self. You’ll sometimes hear it called a pay yourself first budget, though it isn’t really a budget. It’s mainly about following this order, on top of any budgeting methods you already use.

This order gets harder to follow in the months when bills or unexpected costs pile up, like when the car needs new brakes or the electric bill runs high. That’s where automation helps. Instead of moving money by hand every payday, you set it up once to go where you want it, then spend from whatever lands in your checking account.

How to automate your finances in 3 places

You can automate your finances at three points:

• At the source before your pay reaches your checking account

• At the account once the money has landed, and;

• Inside the investment after the money is invested

Each one catches money at a different stage, and can stack.

The first point is the most reliable, because money that never lands in your checking account never has to survive a month of spending. The second is the most widely available, since it runs through your bank rather than your employer, and is the fallback when a split isn’t offered.

The third point sits outside what this article covers. Once money reaches an investing account, the platform takes over, and that’s a subject of its own: here’s what happens to your money once it is invested.

You also don’t need to choose one point. Most people end up using more than one, depending on what is available to them. A split at the source handles the bulk of it, and a transaction-linked tool like Round-Ups® catches smaller amounts between paydays without you needing to schedule anything.

How to split a direct deposit

Most employers let you split a direct deposit across more than one account, either by a fixed dollar amount or percentage of your pay. You set it up once in your payroll system, and from then on, part of every paycheck is routed straight to savings or investing without passing through your checking account. Availability depends on your employer’s payroll provider. 

Here’s how to set it up.

1. Go to your company payroll system and find the direct deposit settings. If you can’t find it, your HR contact or payroll administrator can likely help

2. Add your second account. You’ll need the routing number and account number for the account you’re sending money to. Both are in your banking app, usually under account details.

3. Choose a fixed amount or a percentage. A fixed dollar amount is predictable and easy to reason about. A percentage moves with what you actually earn, which matters if your hours, tips, or commission vary from one pay period to the next.

4. Set the order of your accounts. Payroll systems may ask you to designate one account as the remainder or net pay account, which receives whatever is left after your other splits are funded. Your everyday checking account is usually the one you want in that position.

5. Check your next pay stub, then check the receiving account. The stub shows what payroll sent, but only the receiving account confirms the money actually arrived, so look at both before you stop thinking about it. A mistyped routing or account number is the most common reason a split doesn’t land. Payroll changes often take a cycle or two to take effect, so give it a pay period before assuming something is wrong.

What if your employer doesn’t offer a direct deposit split?

If your employer doesn’t support splitting a deposit, the next best option is a scheduled transfer from your checking account for the day after payday. It works nearly as well. This is the most common way to set up automatic savings, because it runs through your bank rather than your employer, and almost every bank offers it. The difference is that the money passes through checking first, which leaves a short window where it can be spent.

Timing is the most important aspect here. A transfer scheduled for the end of the month competes with everything that has already been spent by then. If scheduled for the day after your pay lands, it comes out of the fullest balance you’ll have all month, which is also when you’re least likely to miss it.

Automating the whole split with Acorns Money Manager

Acorns Money Manager (available on Acorns Gold) splits a deposit across several accounts automatically once it arrives in your Acorns Checking account. 

Once it’s on, deposits are divided across spending, saving, and investing, with an optional share for the kids in your life through Acorns Early Invest. Money Manager will ask you a couple questions, then suggest splits for you that can help you achieve your money goals. You can always edit those splits any time.

If your employer or bank can help split your deposit, you already have the tools to pay yourself first. Money Manager is worth a look if you’d rather have the whole split handled in one place and you’re already on the Gold plan.

What to automate first

When it comes to saving and investing, what you should prioritize depends on where you currently are.

Below is one of the most recognized approaches for setting aside money:

1. Emergency fund

2. Any employer retirement match you’re eligible for

3. High-interest debt

4. Long-term investing

If you can automate for more than one, that’s great! It’s also a good idea to automate one destination first and get it running before adding more. 

In terms of amounts, here’s how much of your paycheck to save each month. For the size of the cushion itself, here’s how big your emergency savings should be. 

On a separate note, you can automate bill payments too. Putting your fixed bills on autopay takes them off the list of things you have to remember, and it pairs well with a split, because whatever stays in your checking account after the split is what those bills will pull from.

What’s worth doing here is matching your automation to that order rather than setting everything up at once. You can always automate more later as each one starts to feel routine.

Can automation backfire?

It can if you have income that varies each month. If the amount doesn’t move when your income does, a lean month can leave your checking account short, and an automation that causes an overdraft can get switched off and rarely gets automatically switched back on. Percentage-based splits and transaction-linked tools avoid this, because they scale on their own. Treat the setup as something you revisit rather than something you finish. 

It’s also worth reviewing if your financial situation changes, such as a raise, new job, change in hours, new bill, or a move.

How to make paying yourself first stick

Paying yourself first sticks the best when it happens in the background. That way, you only focus on what actually hits your checking account and form your budget around that. 

Automate your money with Acorns.

Frequently asked questions

What does paying yourself first actually mean?

Paying yourself first means moving money to savings and investments before you spend on anything else. What can make it stick is automation, which helps with the actual transfer and doesn’t require you to remember or watch your balance get smaller.

How do I automate my savings?

Set up a split direct deposit through your employer’s payroll system so part of every paycheck is routed to savings or investing before it reaches your checking account. If a split isn’t available, schedule a standing transfer from checking for the day after payday.

Can I split my direct deposit between two accounts?

Usually, yes. Most payroll systems let you divide a direct deposit across more than one account by fixed dollar amount or by percentage, though availability depends on your employer’s payroll provider. You’ll need the routing and account numbers for the second account, and most systems ask you to designate one account to receive the remainder.

What should I automate first?

Start with one destination and get it running before adding more. The order most often suggested is an emergency fund, then any employer retirement match, then high-interest debt, then long-term investing.

What happens if my income is irregular?

Fixed transfers on fixed dates can be a little risky if your income varies, because a lean month can leave your checking account short. You can consider other kinds of splits, such as percentage-based splits, where it transfers based on what you earn, and transaction-linked tools like Round-Ups® that transfer when you spend.

Is there a tool that does the whole split for me?

Acorns Money Manager splits deposits across spending, saving, and investing automatically. It’s available on the Acorns Gold plan and requires four open accounts, Checking, Emergency Savings, Later, and Invest, plus a Checking direct deposit of at least $10 or a recurring deposit of at least $50.