How to Make Money Inaccessible to Yourself

30 September 2014


Are you always wondering why there's literally no money left at the end of the month to put away for savings?

For most of us, it's because we have a hard time keeping money in our pockets and always find it burning that proverbial hole. If you are one of those people -- where no matter what you do you always seem to be spending money -- this is the article for you.

Some people need to put their credit card in their freezer or get their spouse to put them on an allowance because their spending habits are so out of control that if they got a hold of money, they'd send their family budgets into a tailspin.

Below are techniques meant to hide your money from yourself, so you don't become your own worst financial enemy:

Go Cash Only and Cash Restricted

Research shows that the physical act of getting cash out of your wallet causes people to think about what they are doing and causes us to instinctively spend less than we would when we can't see a transaction taking place, like through debit or those new Interac Flash systems. According to Investopedia, people spend 12-18% more when they use credit and debit cards over cash.

The key thought for those addicted to spending is to only take out a certain amount of money for the week and if that's gone before the end of the week, it's gone and you can't go back to the ATM. You also should leave your ATM and credit cards at home and if you don't trust yourself with cash either, give control of your wallet to someone else you trust and make it their responsibility to only give you a certain amount of money and keep your wallet away from you if you ask for more.

Set Up a Separate Bank Account that's Hard to Get To

In his book A Million Bucks by 30, Alan Corey suggests setting up a separate account for savings that you can automatically send money to, but is really hard to get to and take money out. He recommends choosing a bank account that's an actual long distance from your home (say, 30 to 50 miles from your home).

Also, you should make sure that you don't tie a debit card or cheques to the account, so that in order to take money out, you actually have to go to your bank every time. Basically, you're just making it ridiculously annoying for you to actually go out and get that money so you won't be tempted. It also makes it easier for you to forget about it to the point where the apocalypse would have to happen for you to need to take money out.

Use Investment Tools and their Penalties

Many investment tools for long-term savings carry steep penalties if you take money out early. Depending on the financial institution, there may be a $25 penalty for withdrawing frequently from a Tax-Free Savings Account. The first withdrawal is generally free, however. If you are connecting your TFSA to another investment tool, such as a GIC you are beholden the rules that govern that investment apparatus.

“Generally, the more access you have to your money, the lower the rate you will receive. Some GICs are cashable, and others are not redeemable at all. Some offer early redemption with a penalty,” reads an article about GICs on

When you're trying to make money harder to get to, nothing is a better motivator than a financial penalty, so use that to your advantage. Also, with GICs you get a higher rate for growth the more you limit your access to your money and the less liquid your cash is.

Transfer Small Amounts of Money into Savings Instead of a Lump Sum

Most financial experts and institutions encourage us to automate a lump sum cash transfer into our savings account once a month, but for most of us, this is doomed to fail.

I don't know about you, but for me this makes managing my savings feel too much like a bill. Plus, if you don't have the money one month, you're going to worry and have anxiety about it. You might even cancel it anyway, since that's so easy to do. Plus, what if you're short on a bill that month and you could've used that money?

Instead of going with the monthly lump sum, personal finance blog recommends transferring smaller, weekly increments into your savings account. For example, $10, $20, or $50 – whatever you can spare that would be about the cost of a night out. This way, you can build a nice little nest egg and you won't miss it or worry about it because you won't even see it. Maybe you'll even think you already spent it somewhere else and it'll be so rewarding to look later and see that the money is actually still there. Very life affirming.

Photo credit: Duckie Monster

TOPICS:   Banking

1 comment

  • Shawn M.
    Bury it.

What do you think?

Your comment