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Tip #397: Hide your money from yourself

by J. Money on Friday, October 1, 2010

hide and seek squirrel
This is a tip that I never really thought worked, but starting to realize its benefits. I first read about it in my boy Alan Corey’s book , A Million Bucks by 30, and for whatever reason it was the one main thing that stuck in my mind :)  That, and realizing I’d never hit $1 Mil by the time I turn 30! Haha…  but it was a pretty entertaining book.  And oddly written just like me!

Anyways, the idea here is to open up a separate account away from all your day-to-days where you can automatically send money to, but won’t be tempted to touch.  And the reason you wouldn’t be tempted is because you’d pick a physical bank that’s really really far away from you :)  Say, like 30-50 miles out or something.  And then you’d make sure not to set up online access or activate debit cards or checks or anything else that would give you easy access to it.

Basically, you’re making it INCREDIBLY annoying to go and fetch all that money out :) You’re not hiding it from yourself all the way, but you ARE hiding it from your day-to-day activities.

As I said, originally I thought it was a cool idea but never really thought it would help me, personally.  Well, after doing it accidentally for all my “hustle” money these past few months, I’m starting to recognize the benefits.  It’s like proving a theory in science class ;)  Everything seems like it would make sense, but until you put it to real life action you never truly know!

And because the bank I had chose ended up having really crappy online access, and I was too lazy to activate my check card (thus, making this experiment accidental), I’ve been able to save for 5 months straight without a *single* withdrawal! How cool is that?

If you’re having trouble keeping your hands out of the cookie jar, I recommend giving this a shot. Find a bank you trust, set up automatic xfers into it, and then do your best to forget about it.  You can always go over and take it out, but the hope is that something would REALLY have to come up in order for you to put in the effort to make it happen.

We’re a funny group of humans.  Sometimes we have to trick ourselves in order to do something we know is good for us :) Has anyone else had success with this?

————
PS: This “side hustle” money is not @ USAA,  I wanted something totally separate…
(hiding squirrel by webhamster)


{ 38 comments… read them below or add one }

1 Kevin @ Thousandaire.com October 1, 2010 at 8:58 am

I can’t say I’ve ever put money in a very difficult to reach place.

However, I did send 5% of my direct deposit to a new checking account because they needed a direct deposit to give me the $125 sign up bonus, and I kind of forgot about that money. When I remembered it, I had a nice little sum there after about five months.

I like your idea of making it physically difficult to withdraw, because once I remembered I was ready to take it out (not to spend but to invest. I hate 0% interest)

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2 Jeff @ Sustainable Life Blog October 1, 2010 at 9:04 am

I’ve definitely done this. I used to have my savings account at the same bank as my checking, and at the beginning of the month I would transfer some money into it. Then towards the end of the month, I’d transfer money out of it because I was a little short. I realized after far too long that what I was doing wasnt working, so I moved my savings account to a bank out of state.

I never touch the money, but its been building there for a while now!

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3 Leslie October 1, 2010 at 9:27 am

This is why I use ING for my savings! It is really annoying to transfer money and have to wait the 3 days to use it! This means I am never tempted to withdraw from savings for instant gratification. Definitely works for me!

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4 Roshawn @ Watson Inc October 1, 2010 at 9:29 am

I definitely do this as well. I don’t remember, but I suppose it probably was annoying initially. However, once I got use to it, I was fine with having the money difficult to reach.

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5 Rachel October 1, 2010 at 9:31 am

I do the same thing through an ING savings account. I have a small percentage of each paycheck go to that account through direct deposit. I never see it, never think about it, nor do I check the balance of the account on a daily basis, like I seem to do with my checking account. Another feature which helps curb withdrawals to the account is that ING always takes about 3 days to transfer funds from their savings account to your checking account. The fact that it is not immediately available to me helps the savings grow.

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6 Jenn @ Paying Myself October 1, 2010 at 10:10 am

I’m the same – I use ING for my savings accounts. It’s not quite miles away from my home and I can access it online, but the fact that I can’t see it with the rest of my money when I log into my spending accounts and it takes a few extra steps to transfer it keeps me from spending it and thinking I’ll just put it back later.

Like Rachel, when I was employed (vs self employed) I had my employer direct deposit a portion of my cheque into one account and the rest into another. At the time it was a division between my misc spending money and my targeted spending (e.g. rent, loans, etc.) so I would stay within budget. It’s worthwhile to ask your employer if they can do this. I seem to recall mine would split into up to three accounts.

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7 Techbud October 1, 2010 at 11:16 am

A nice little deterrent from spending. Anyone ever freeze their credit cards in ice? Helps avoid those impulse purchases when you need to wait a few hours for them to thaw.

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8 MoneyMan @ FinancialOdyssey October 1, 2010 at 11:54 am

Nice idea,I’ve thought of being that extreme i guess. I did at one point use an online savings account where I had to wait 2 days for the money to be transferred.

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9 Lulu October 1, 2010 at 12:01 pm

I am also an ING user who does this but I also use Ally bank to save money as well. I tend not to use cash and don’t order checks for my checking accounts as well so that I do not end up ‘needing’ to withdraw.

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10 Jenna October 1, 2010 at 12:05 pm

My dad brought me home a bamboo piggie bank that you have to break to the get money out. Like chop it like firewood. I’m been filling it with quarters for the last year. Will be fun the bust that open once it’s completely filled.

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11 Annette October 1, 2010 at 12:20 pm

One of the first things my dad told me was to pay myself (after tithing, yes I tithe). I used to do this too until bills starting eating 100% of my check. HSBC is another bank that is hard to get to but easy to set up online transfers and deposits – and they used to have a really great savings rate, like 4% It’s much lower now. I need to start doing it again. Thanks for the reminder.

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12 Que October 1, 2010 at 12:21 pm

That’s a cool idea. I might have to try it. But that is when I have a few dollars to spare. I might just start burying money in the backyard like they did in the old days. That way, I know I would have to go through manual labor to retrieve it. That stuff might stay back there for decades like that.

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13 Robert October 1, 2010 at 12:23 pm

Jenna,

Great idea about the piggy bank you have to break to get the money out of. If it’s super cute, it’ll be almost impossible to bring yourself to smash it!

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14 Jonathan October 1, 2010 at 12:28 pm

Just make sure your state doesn’t take the money as unclaimed property. With state funds running low, some states have lowered the limit on accounts to 3 years. And making deposits, soesn’t count as activity.

So be sure that you watch your mail and email if you try this. It’d suck to find out that all those savings had disappeared.

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15 KP October 1, 2010 at 12:51 pm

This is a great way to save! The only thing is that you have to be aware of the terms of your account and avoid any bank fees.

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16 Jenna October 1, 2010 at 1:03 pm

@Robert – Yeah, it’s a beautiful bank. Hand carved bamboo with Chinese poem on wealth and prosperity.

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17 LB October 1, 2010 at 2:16 pm

I have an account at a bank that is about an hour and a half to two hours away from me. It’s just a savings account and I did use it to put a few random deposits in. I tried to see if I could save easier this way, but found out I get a way better interest rate through ING. I am planning on finally closing the account out this weekend, because it is more of a hassle than it is worth.

I would rather have access to my money with a decent interest rate, than money I can’t get to easy and a smaller interest rate. I guess I just trust myself with saving.

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18 Trina October 1, 2010 at 6:03 pm

We did this sort of by accident. We opened a car loan through a credit union with direct deposit in the amount of the payment. Even after the car was paid off the direct deposit went through…it ended up being a nice little chunk of money that, although not impossible to access, is a bit of a hassle.
It’s been great for us.

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19 Bobby October 1, 2010 at 8:15 pm

I have this problem when I have too much in my checking account. My savings accounts are fine as I don’t go near them but if I’m trying to build up some money in my checking account it’s hard not to touch the extra there.

I’ll be getting me an ING savings account at some point for the extra and shouldn’t have that problem anymore.

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20 Jessica October 2, 2010 at 12:50 am

Similar to ING is SmartyPig. I like it as well because I can set up accounts for my kids and tell family members to pay that acct directly. I have had times when I’ve had to “borrow” from my kids and I end up feeling guilty about that.

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21 michelle October 2, 2010 at 1:07 am

love this idea. that’s kinda how i treat my smartypig account. i check it regularly, but i don’t touch the money there :)

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22 Slackerjo October 2, 2010 at 8:29 am

I have all my bills charged to my credit card (I collect the points and 2.5 yrs later, I buy a gas card with the points. I don’t have a lot of bills!) and I transfer my RRSP and savings/emergency fund stuff online (I could automate it, but I like doing cause it’s fun!) Then it’s off to the bank where I withdraw a modest pile of crisp $20 bills. I actually put the money in cans on a shelf that requires me to step on a stool to reach the shelf. Even though it takes about 5 seconds to get the stool and step on it, for some reason, that is enough of a mental block to keep me from constantly raiding my can of twenty dollar bills!

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23 Pretty Unfamous October 2, 2010 at 1:58 pm

That’s what I’m doing for a lot of my savings goals. My normal bank is attached to my ING savings accounts. Therefore, money goes into them directly, but takes a few days if I want to transfer money OUT of there.

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24 J. Money October 2, 2010 at 7:14 pm

Wow, lots of ING love going on! I agree though – it’s a perfect bank to try this out on too (smartypig as well) since it does take a while to xfer cash, etc. I haven’t touched my ING $ in over a year! haha… I think there’s like $200ish in there from past referral bonuses and stuff like that. I should probably take it out ;)

Let us know if you give this a shot and it works! Or why it doesn’t!

@Jenna – HAH! I love that. Would be fun as hell chopping up the piggy bank too to get to all that money ;)
@Jonathan – That’s interesting… you would think making deposits counts as activity, right? I wonder how many people this affects? That would seriously suck.

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25 Journey To Our Home October 3, 2010 at 9:36 pm

We use an online banking account that is our House Savings Account. Once money goes into it, it doesn’t come out. Mostly because it is annoying to wait for it. But both my husband and I have savings accounts at the same bank as our Checking account is at, and if we are a little short it is much easier to transfer a little money into it.

Because of the annoying aspect of the online account, and because we are saving to build our house from the bottom up, we have a substantial amount in it. Not enough for a construction loan yet, but a substantial amount.

Our kids each have savings accounts at our bank as well. But we don’t touch their money- I have it auto deposited with my checks. The problem we run into is never knowing the account number and putting their money in our checking account and then forgetting to transfer it to THEIR account.

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26 Lauren October 4, 2010 at 9:51 am

I guess I can say “me too” when it comes to the ING account. It works because it is harder for me to access my money. It also has a higher interest rate than most banks and credit unions even though it’s not as high as it use to be. @Annette I think you should still pay yourself first. I’ve been in your position before where literally my whole paycheck goes to bills. Now when I think about it I could of cut back on something like groceries and put that little bit of money into savings. Even if you only save $5, save something.

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27 The Skinny On October 4, 2010 at 4:14 pm

I setup a Way 2 save account with Wachovia about a year ago. The account has a 5% interest rate for the 1st year. It was great until my car broke and I had to dip into it. It is a great hassle free way for me to save $$ though.

-Chris

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28 Mike October 4, 2010 at 10:12 pm

@jessica, @J. Money, and other who suggested smarty pig

I’ve used smarty pig and I loved it. So far to date, I’ve set up two separate savings goals and hit both of them!! It’s like a savings account, but the money is harder to retrieve because you can only take all of it or none of it out. So it really makes you think if you really want to touch the money.

Mike

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29 J. Money October 5, 2010 at 9:48 am

I’ve been trying to get back into SmartyPig myself, but I just have so many accounts open that it’s becoming crazy to manage! haha… but I do have a $50 “gift card” to them. or maybe I should just give it out on the blog, here?

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30 nicole October 5, 2010 at 3:00 pm

Too late for me to have a million by 30… man, graduate school really messes a person’s wealth up.

I’m a big fan of automatic savings. I do wish online saving had better interest rates these days. I’ve been funneling more to my mortgage these days which is a little disturbing because I can’t get it back. There’s a balance between making it difficult to access and making it really difficult. But I don’t want to put all my extra money in stocks, or in something that gains next to no interest.

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31 Holly @ Shopaholly October 5, 2010 at 4:04 pm

I have a neat little trick for hiding money from myself which is actually really dumb. Sometimes when I use a different purse or handbag I purposely leave a £5 note or some coins in it. I forget about it pretty quickly but the next time I use that bag I’m like “SCORE!!! Free money!!!”

So silly, since it’s obviously mine in the first place but it’s a nice way to make my future self’s day.

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32 J. Money October 7, 2010 at 11:00 pm

haha, that is awesome! you know, i do that myself except that it’s all by ACCIDENT! haha… you make my smile Holly, have a blessed weekend :)

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33 Andi B. @ Modern Tightwad October 13, 2010 at 9:34 pm

Back when I got tip money I would always put my first tips of the day in a random pocket in my wallet, knowing I’d forget about it. Then when the hubby and I were out someplace and needed cash, I’d start looking through my wallet and always find a 20 or some other random money. We called it the “magic pocket.” I don’t get tips anymore, and I really miss the magic pocket because it most often blessed us with magic beer.

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34 J. Money October 14, 2010 at 10:15 am

hahahahaaha…. oh how I’d love to hang out with you two one day :) absolutely brilliant.

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35 Andi B. @ Modern Tightwad October 21, 2010 at 1:30 am

As much as I would love to take you and Ms. Money out for beers if you were ever in Portland I don’t think you’re ever allowed to meet my hubbin. He too has an affinity for hip-hop, and just had to shave his hawk due to work. (Corporate, you know?) That much awesome in a room and the universe may implode. Eh, I’ll risk it. If you guys ever make it out to the Pacific Northwest, look us up. :)

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36 J. Money October 22, 2010 at 1:23 pm

haha… you better believe I will! esp after a statement like that. shooooooooooot.

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37 Jamilah M. July 11, 2012 at 10:44 pm

This is brilliant.

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38 J. Money July 23, 2012 at 5:39 pm

Glad you like it :) You gonna start hiding some?

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