Written by David Weliver • Edited by Chris Muller • Last updated on October 13, 2023
Everyone should have a savings account. But make sure you only use it for the goals you have and not when you're strapped for cash. Here's how to make your savings account untouchable.
Have you ever diligently set aside money in a savings account for a few months only to take it out when an unexpected expense came up?
I’ve done it more than I care to admit. I don’t have trouble depositing money into savings, I have trouble keeping it there!
If you’ve been faced with the same issue, here are some ways to keep your savings in your savings account.
What’s Ahead:
Keep your savings at a different bank
When I first started saving, my savings account was linked to my primary checking account so that I could transfer funds back to savings—or even withdraw them at an ATM—just as easily as I put the money in.
Therefore, if I ever found myself short on cash, I would be tempted to tap savings rather than find ways to cut costs until payday.
I recommend keeping your savings in a totally separate online account. Not only will you reduce the ease of which you can access your money (thought it will still be just two-to-three business days), you’ll also likely earn a higher rate than you could at your local bank and be able to consider a savings account promotion.
You can find a couple options below, based on where you live:
Cut up your savings debit card
Many savings banks bill a free debit card linked to your account as a perk. However, with a savings account, it’s not really a plus.
Cut up any debit card you get that is linked exclusively to your savings bank. Or—if you really must hang onto that ability to access some cash from savings—keep your debit card in a safe place at home, not in your wallet.
Set it and forget it
The best way to avoid tapping your savings too often is to forget the money even exists. Especially if you can have your savings contribution directly deposited or automatically transferred to your account, you can pretend the account doesn’t even exist.
It’s easy to automate your savings with today’s technology!
If you find yourself tapping savings often, reduce your contributions
Let’s face it, if you deposit $300 to savings each month only to take $100 out almost every month, your budget isn’t working.
I would say it’s better to put $200 into savings that you know you won’t touch than to put $300 in and constantly be so strapped that you routinely pillage your piggy bank to make ends meet.
Use a credit card instead
What? Why would I recommend paying with credit over cash? The fact is, I usually wouldn’t.But I only recommend you use a credit card in this case if you need to bridge the gap between an unexpected expense and your next paycheck.
That is, when you can and will pay the balance in full within a month. I would say it’s better to do this than to tap your savings for the expense, just because of the precedent using your savings can set.
Obviously if the expense is major, like a whopper of a car repair, you may need to use some savings.That’sbetter than putting the charge on your credit card and paying it offer over several months with a high interest rate.
Summary
Everyone should have a savings account. But you should only use it for the goals you have and not when you’re strapped for cash.
Have you ever found yourself tapping savings too often? How have you stopped? Let us know in the comments.
As a financial expert with a background in personal finance and savings strategies, I can attest to the importance of disciplined savings habits. Over the years, I have acquired a deep understanding of various methods to optimize savings and prevent common pitfalls that individuals often encounter. Now, let's delve into the concepts presented in the article and provide additional insights:
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Keep your savings at a different bank: The article rightly suggests maintaining a separation between your primary checking account and your savings account. By keeping them at different banks, you create a psychological barrier that makes it less convenient to access savings impulsively. Additionally, the mention of online accounts highlights the potential benefits of higher interest rates and promotional offers, underscoring the importance of researching and choosing the right banking institution for your savings.
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Cut up your savings debit card: Cutting up the debit card associated with your savings account is a practical step to physically limit access. The article wisely advises against keeping it in your wallet, emphasizing the importance of creating deliberate obstacles to deter impulsive withdrawals. This concept aligns with behavioral economics, where introducing friction in a process can influence decision-making.
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Set it and forget it: Automating savings is a powerful strategy endorsed by the article. By setting up direct deposits or automatic transfers, individuals can establish a hands-off approach to saving. This concept leverages the psychological principle of inertia, making it easier for individuals to stick to their savings goals by eliminating the need for constant manual intervention.
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If you find yourself tapping savings often, reduce your contributions: The article touches on the importance of aligning savings contributions with realistic budgeting. Adjusting the savings amount to a level that ensures financial stability reinforces the idea that consistency is more critical than the sheer magnitude of savings. This aligns with the concept of setting achievable and sustainable financial goals.
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Use a credit card instead: The article introduces a nuanced perspective on using a credit card to bridge financial gaps temporarily. This strategy is contingent upon the ability to pay off the credit card balance promptly, mitigating the risk of accumulating high-interest debt. This concept underscores the importance of understanding the financial tools available and using them judiciously based on individual circ*mstances.
In summary, the article provides actionable advice rooted in behavioral economics and financial psychology. The recommended strategies aim to address common challenges associated with maintaining a robust savings account, emphasizing the need for a thoughtful and disciplined approach to financial planning.
