Jul 28, 2022
Direct deposit for teens 101: What to do with your first paycheck
First job, first day, first paycheck. Icing on the cake: Getting that first paycheck sent directly to your Greenlight account.
More money = more responsibility. That’s why it’s important to budget and plan how to spend your regular paychecks. It’s awesome you’re starting to earn money, and it’s an even sweeter deal with a banking app to keep your earnings all in one place (ahem, Greenlight)*. Before your first paycheck hits, let’s learn the best way to go about managing it.
Enter direct deposit for teens
During your first week of work, you’ll be asked how you want to get paid. One way is through direct deposit. Direct deposit is when your paycheck goes directly and digitally to your account. That means no physical paper checks. When you choose how you want to get paid, you can set up direct deposit right in your Greenlight app. Can we get a woop woop?
Why direct deposit?
More than 93% of U.S. workers get paid via direct deposit. Wondering why direct deposit is a popular option? Here are a few reasons:
Back in the day, pay day meant a trip to the bank. As in, a physical bank 🤯 When you set up direct deposit with Greenlight, your paychecks will go straight to your “Spend Anywhere” balance. (More to come on how to manage that cash flow.)
You can count on getting paid on time, every time. It doesn’t matter if you’re out of town or sick on pay day — your money will still hit your Greenlight account.
It’s all in one place.
Having all of your money in one place makes it easier for you to manage it. In your app, you’ll be able to see how much money you’re making from your job, how your savings are coming along and see how investments are doing. All 👏 in 👏 one 👏 place 👏
How to keep your paycheck in check
Now for the fun stuff: figuring out how to budget your income. You may have heard about the 50/30/20 rule (50% ➡️ needs, 30% ➡️ wants, 20% ➡️ savings). Or, your parents may have shared their own budgeting rules with you. When you’re ready to decide what to do with your paychecks, remember all the ways you can manage your money to reach your goals:
Set savings goals
Spend on needs
Give to charities
Keep saving (and earning 2% on your savings*)
Find a budgeting method you can bank on
Everyone puts their paycheck to work in different ways. We won’t tell you exactly how to budget — that’s for you to decide! Take a look at two ways that show just how differently you can break down your paycheck.
Important note: We are not recommending any of the following budgeting breakdowns. These are intended to help you understand 3 of the many ways you can split up your paycheck.
Monthly income: $800
The saver has big savings goals — first, a car. Then, college. Because their goals are short term, they’re more focused on saving than investing. Plus, they have Greenlight Max, so they get 1% cash back and 2% on their savings.** Sweet.
They decided to spend 40% on needs and save the remaining 60%.
Monthly income: $800
Donating to charities is top of mind for the giver. They have a well-rounded budgeting plan that includes saving, spending, investing and giving. They don’t put as much into their investments, so they have a little more room to give their money to organizations they care about.
They decided to spend 40% on needs, save 25%, invest 20% and give away 15%.
Monthly income: $800
Planning for the long-term usually means investing. The future-planner divides their paycheck between saving, spending and investing.
They decided to spend 50% on needs, invest 40% and save the remaining 10%.
What’s next? A quick party dance. Getting a job and learning to manage your income is a huge deal — we’re proud. Stick around in the app for more tips and tricks and open up the convo with your family (chances are your parents have done the direct deposit thing once or twice). Happy earning!
*Greenlight is a financial technology company, not a bank. The Greenlight app facilitates banking services through Community Federal Savings Bank (CFSB), Member FDIC.
**Greenlight and Greenlight + Invest families can earn monthly rewards of 1% per annum and Greenlight Max families can earn 2% per annum on an average daily savings balance of up to $5,000 per family. Only Greenlight Max families can earn 1% cash back on spending monthly. To qualify, the Primary Account must be in Good Standing and have a verified ACH funding account. See Greenlight Terms of Service for details. Subject to change at any time.
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