Direct deposit for teens: All you need to know

Getting your first paycheck is a great feeling. But what do you do with it? 

Aside from setting up a budget outlining your monthly income and expenses, you need a place to store and manage your earnings. You want to use a tool — like the Greenlight family debit card app — where you can safely keep your funds and manage and access them remotely. 

Setting up direct deposit for teens helps them get financially literate and understand how to manage their money. But first, you need to know exactly what direct deposit for teens looks like. 

This guide covers everything you need to know about how direct deposit works, online banking, and getting a teen debit card.

What is direct deposit?

When you land a job, one of the first things your new employer will ask you is how you want to get paid. Options are typically paper checks or direct deposit. Direct deposit is when your paycheck is transferred directly into your bank account. 

Direct deposit is the most common — and convenient — method for most people. About 95% of American workers go with direct deposit.

Terms related to direct deposit

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You may also see these terms related to direct deposit: 

• ACH: Automated clearing house. An ACH transfer is how money is moved from account to account, aka direct deposit. 

• EFT: Electronic funds transfers move money digitally with direct deposit. (ACH is just a type of EFT.)

Can a minor get a direct deposit?

Yes, teens can sign up for direct deposit using their checking account. Note that usually, kids under 13 will need to get their account number from their parents.

Once a direct deposit is complete, funds are immediately available; you can use them directly from your bank account with your debit card. The great part of direct debit is you can set it up on any device, even your phone when you use a mobile app. 

Why direct deposit? Key benefits

Here’s how direct deposit can be helpful in managing your hard-earned wages: 

• Secure, timely access: Direct deposit is very safe, and instead of waiting around for a check to get into your account, the time for direct deposit to hit is immediate. Physical checks can involve waiting hours or days for funds to be available. 

• Better budgeting and money management: Because your paycheck automatically goes into your account, you know exactly when those funds will hit. That makes it easier to plan your budget and expenses.

• Lower risk of losing cash or checks: When someone gives you a check, it’s easy to misplace it or put off depositing it. 

• Less risk of overdraft charges: Deposit delays can also derail your budget. If you have automatic bill payments, you could incur overdraft charges (from both banks!) if those payments hit before you’ve deposited your paycheck. 

Teen-friendly banks with direct deposit

There’s lots to consider when looking for a bank. Look for a bank or card with teen checking accounts, online banking, and a card for kids that addresses their unique needs.

Look for a bank that has these perks:

• No monthly fees for a teen checking account

• Local ATM access so you can get your cash when you need it

• Resources to help you learn about financial wellness, like saving tips and spending limits

• Interest-earning checking accounts to grow your savings

• Strong parental controls based on your family’s goals

Many banks and cards offer multiple checking account options for your direct deposit. 

How to set up direct deposit for teens

Once you’ve decided on a service provider, it’s time to set up direct deposit with your employer. Follow these steps after you have your account:

1. Set goals

Sit down with your family to walk through your financial plan, like savings goals and what you’re saving for. Talk about a realistic budget you can stick to every week based on your income.

2. Set up a checking account

Once you’ve selected the right bank for your checking account, set up your account. Some banks will require you to make a minimum deposit to get things moving.

3. Complete the paperwork

When you’re hired, your employer will ask you to fill out direct deposit documentation. You’ll need to provide:

• Your contact information

• Your bank information

• Your checking account and routing numbers

Note: The bank routing number will be displayed with your account information online or at the bottom of your personal checks.

Then, you’re ready to start getting those deposits!

For teens: 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

• Invest 

• Spend on needs

• Give to charities 

• Keep saving (and earning 3% on your savings*)

For parents

To help guide teens in responsible money management, consider accounts or platforms with parental controls. All-in-one apps like Greenlight let you set up spending limits, approvals, or instant notifications. 

Even more important is helping your teen become financially independent and healthy. This means talking through budgeting best practices, going over spending each month and educating them about savings and investing strategies. 

Teaching teens financial literacy will help them manage their money well, now and in the future. Direct deposit is one of the easiest ways to start an organized budget.

Discover a teen banking app built for you

With the Greenlight debit card and family money app, you can set and track financial goals using our intuitive mobile app. You can even assign chores and automate allowance. Greenlight also makes it easy to invest as a family and transfer money in moments, and we’ll show you how to get debit cards for teens.

Find out how Greenlight is changing the way families bank* with direct deposit, a debit card for teens, investing with parent approval, and even financial literacy games. Try Greenlight today.

*Greenlight is a financial technology company, not a bank. The Greenlight app facilitates banking services through Community Federal Savings Bank (CFSB), Member FDIC.