When I opened a bank account in college, I did no research. More than a decade later, I found that I was losing hundreds of dollars to hidden fees, prompting me to finally do some Googling and switch to a bank that better fit my needs.
I love my new bank. It offers high-yield savings accounts, has no overdraft or maintenance fees and more accessible ATMs. It also came with a perk I wasn’t expecting: early direct deposit.
Now, my paychecks hit my account every other Wednesday instead of Friday.
It turns out many financial institutions, such as Capital One, Ally and Wells Fargo, provide early direct deposit. The service is usually automatic, meaning you don’t have to opt into it.
The first time I saw my full paycheck in my account on a Wednesday, I assumed it was a mistake — a very exciting mistake. And because my previous bank paid me on Friday, I was, in fact, getting paid two days earlier than I would have if I hadn’t switched banks.
As time went on, I expected Wednesday afternoons to stop feeling like a gift. But they didn’t. Even though I’m still only getting paid once every two weeks, I feel less financially strained.
Talking to experts, I found there are a few reasons I feel like I have more money, even though I don’t.
‘The average number you see in your bank account might be different’
Filipe Correia, an assistant professor at the University of Georgia department of finance, studies the effects of paycheck frequency on spending and saving habits. Pulling from his own research, he found that the day of the week on which someone is paid does alter their actions.
When people are paid toward the end of the week, they tend to spend more money.
Regardless of how much a person earns, “the percentage of income consumed increases throughout the week,” he says.
And higher consumption toward the end of the week is correlated with lower savings and more borrowing.
So, why does getting paid on Friday prompt higher spending?
Nashira Lynton, a financial therapist, says getting and then immediately spending money can sometimes lead to unnecessary shopping.
“Hypothetically [getting paid on Friday] can lead to the thought: ‘I get paid and then my money disappears quickly,'” she says. “This can lead to feelings like ‘I don’t have enough to last me until the next check’ or anxious feelings around running out of money, which, in turn, could make you spend even more just to feel better.”
As someone who partakes in regular retail therapy, this is quite possible.
I could also be experiencing something called the “endowment effect,” Hal Hershfield, a professor at the University of California, Los Angeles Anderson School of Management, told me.
The endowment effect refers to an emotional bias where once you own something, you value it more than if you didn’t.
Perhaps, Hershfield says, when I was paid Fridays, the money drained from my account so quickly that I didn’t feel I had any ownership of it.
“When you get paid on Wednesday, by the time the weekend rolls around, it now feels more like money that you own and so you become more reluctant to spend it,” he says. “Once we own something, the pain of getting rid of it feels quite salient.”
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Because I spend less during the weekdays, I might literally be seeing a higher number in my bank account for more days, Correia says. This could make me feel like I’m earning more.
Let’s say a paycheck for $1,000 is deposited into my account on a Wednesday, Correia says. If I spend more on weekends than I do on weekdays, the number in my bank account is likely closer to $1,000 until Friday.
If I got paid Friday, I’d never really see the full amount or close to the full amount in my bank account. “The average number you see in your bank account might be different, but you don’t have more money,” he says.
Regardless of why, I know getting paid Wednesdays makes me feel less like I’m living paycheck to paycheck. I hope the illusion lasts forever.
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