We’ve all heard the saying “out of sight, out of mind,” and when it comes to reining in your spending habits, the concept of hiding money from yourself can be a great way to keep your financial goals on track. In fact, many times it’s the accounts that we forget about — and are left to accumulate — that are the biggest drivers of long-term wealth.
These 7 simple tips will help with how to hide money from yourself, so that you can stop spending on unnecessary things.
1. Just Say No to Overdrafting
Most banks allow account holders to overdraft their accounts when they don’t have the funds available as a sort-of short-term “I-O-U” to the bank. One way to make sure you cannot spend more than what you have is simply to opt out of your bank’s overdraft feature so that your card will decline when you don’t have the funds to pay.
2. When Your Pay Increases, Up Your Savings
Each time your income increases is an opportunity to save. When you get a pay increase, consider putting a percentage of the new amount into investments and savings accounts that will grow over time, such as high-yield savings, a Roth IRA, or a Health Savings Account (HSA).
3. Set Up Automatic Savings
One of the best ways to hide money from yourself is to automate your savings. This method can feed your emergency fund, Christmas account, or help you reach another savings goal.
Be sure to check out AAFMAA’s 5 easy ways to save money automatically to learn how to:
- Save money from each paycheck
- Use automatic savings tools
- Cut spending and put it in savings
- Automatically increase your 401(k) contributions
- Tuck money away for the holidays
4. Earmark Accounts for Your Goals.
Name your financial accounts in a way that reminds you of your goals so you’ll be less tempted to spend the money. For example: “Vacation Account” or “Home Remodeling Account.”
Fund these accounts regularly by setting up an automatic transfer from your checking account directly into your “hidden money” account(s). If you receive a lump sum of cash, consider doing a one-time transfer into each account. By the time you’re ready for vacation or your next home remodeling project, you’ll already have some money saved up so that you don’t have to worry about pulling from your main savings or emergency fund.
5. Overpay Your Taxes
Did you know that you can purposefully make an overpayment of taxes? You won’t be able to access the money until you file your taxes for next year, after which you may get any excess back in the form of a refund.
6. Make Your “Hidden Money” Hard to Access
This may seem counterintuitive, but if your savings are easy to draw from, you may find yourself spending frivolously due to easy withdrawals or transfers into your checking account. Make sure each “hidden” account has a layer of complexity when you want to withdraw funds. That might mean having a 2- to 3-day transfer timeline, penalties for early withdrawal, or holding accounts at a different bank than your main checking account.
7. Freeze Your Credit Cards, Literally
Credit cards can accumulate debt FAST, so if you find yourself overspending each month, one simple solution might be to freeze your credit card(s), literally. Some people have stopped their bad spending habits by freezing their credit cards in a block of water in their freezer until they pay off their bill or until their next check (for real — people actually do this!).
If your credit card has a “freeze” option within their app, that may also work, but there’s nothing that makes a statement to yourself like putting your cards on actual ice!
Once you have set your budget for basic needs, the next thing to do is to find ways to hide money from yourself. After all, we all can think of something to spend more money on… so if we don’t have the money in our checking account(s), we simply won’t spend it, right?
Do you hide money from yourself? What strategies have worked best for you?