DISQUS

Consumerism Commentary: Put Your Savings in Hyperdrive, Part 5: Hide Your Savings From Yourself

  • The Dividend Guy · 1 year ago
    I also think that using a tax deferred account also helps to "hide" the money - there are some pretty big steps to get at it. This is one of the often unspoken benefits of retirement accounts.
  • Mccy · 1 year ago
    Another good suggestion I've taken to heart: Ladder it. A good number of 6 month CDs have good rates with as low as $500. For as little as $3000 dollars, you can set it up so you have one CD a month maturing. Have your automatic investment roll right into whichever CD matures that month, and reinvest for another 6 months. The rate can at least compare to, and usually beats most high interest accounts, while still being FDIC or NCUA insured. Plus, 5/6ths of it seems locked away from you at any one time. Of course, you don't want to do this with money you want or need to have easy access to, but if you're trying to make your money work for you while hiding it from yourself, it's a good way to go. Most banks will even automatically roll the CD over when it matures if you ask them to.

    Downside: It requires a bit more hands on than just setting up an automatic deposit and forgetting it. You'll have to keep track of when each CD matures and manually reinvest if you want to roll your automatic deposit in. I feel that this makes up for it by making the money feel less available and in a smaller amount by dividing it and staggering it out.
  • Flexo · 1 year ago
    Dividend Guy & Mccy: Great ideas, thanks for sharing. CDs are good -- the "penalty" you would pay for taking your money out early should provide sufficient deterrent from early withdrawals.
  • Dan · 1 year ago
    Re: #3

    I keep track of my savings accounts, but label them emergency fund, new house fund, etc. It's hard to buy a new tv with the money I can use to upgrade my house.
  • Ginger · 1 year ago
    Such great advice: "The more you don’t see or otherwise come into contact with your money, the less tempted you are to access and spend it"

    This is my issue, not seeing it. But Im getting past it as its helping to build more savings. Out of site out of mind.
  • Heidi · 1 year ago
    Excellent tip! I plan on hiding my annual bonus this year (short term CD) until my wedding.

    Mccy - I often recommend laddered CDs to clients who want to be able to access their cash in regular intervals and want to avoid market risk. This is an especially wise strategy for those in or nearing retirement. Current market conditions are driving more people to a bank/guaranteed soluion.