Having Trouble Letting Your Savings Account Build Up? Try This Life Hack

September 19, 2018

Modern banking is amazingly convenient. With the improvement of banking apps these days, you can pay bills, send money to friends and even deposit checks without getting up from your couch. However, this convenience can also make it too easy to get to our savings. (Anyone else remember taking your check to the bank to cash it before they close on Friday? Or forgoing a purchase because you didn’t withdraw enough from the drive-thru teller?)

When it’s too convenient

If you find that whenever you build up a balance in your savings account it somehow gets sucked into your spending account, convenience may be part of the problem. With a few touches on your phone you can move money from your savings account to your checking (i.e. spending) account, no pants needed.

The key to letting your savings build up

Rather than going old-school, there is a way to remove this temptation without deleting your banking app. It’s all about using a separate banking institution for your savings. To get started, search online for a high yield savings account. “High yield” is a relative term – these accounts are only paying about 1.55% to 1.85% right now – but that is higher than the 0.08% most savings accounts pay that are offered at more traditional banks. Most of these accounts have very low minimums to start (some as low as $1.00) and you can transfer money from your high yield savings account back to your checking (spending) account when you need it.

The downsides, which could be upsides

The downsides of most high yield savings accounts include no ATM fee reimbursements, no checking and you must establish the account online. Plus, there’s usually a lag of at least a couple days between requesting money and having it show up in your checking account. If you’re looking for a way to save your savings from yourself, then these “downsides” can actually work to your advantage in keeping your savings there.

Making it automatic

I recommend setting up an automatic draft from your current checking (spending) account into your new high yield savings account every time your paycheck hits your account. Use our Easy Spending Plan to compare where your take home pay is going to help you find a reasonable amount to set aside, then plug that amount into our Daily Savings Calculator to see how your account can grow if you actually let it alone.

Setting a ground rule for yourself

The key to success with this method is this: to prevent the easy swipe back to your savings account, do not access your high yield savings on your phone (or the device you use the most). Make it a rule that you will only access it on the device you use least frequently. So for example, I do most of my banking on my phone (paying bills, checking balances, transferring money to my kid’s accounts, etc.) and I rarely access my banking account on my laptop.

Therefore the only place I log in to my high yield savings account is my laptop. And it works. Getting up off my couch and walking to my laptop gives me time to think if it is really worth moving my savings to my spending account and allows that account to grow for what it’s intended – to be there when I need it, not when I want it.