About 7 years ago, I learned a 10-minute savings hack that completely transformed my financial life. Unfortunately for my future self, it took me over a year to actually do it.
But once I implemented it, my savings went from dismal and dwindling to vibrant and growing.
Are you ready for this super-simple, almost-too-easy, tip?
Let’s not waste any time…
Isolate Your Savings
In other words, open a new savings account at a completely different bank than you normally use, and keep almost all of your savings there.
I know that sounds pretty basic, but in my experience, this seemingly-simple money-saving hack works for 3 reasons:
#1: Parkinson’s Law
If you’ve never heard of Parkinson’s Law, it basically states that as humans, our demand will typically expand or contract relative to our available supply.”
Think of it like a tube of toothpaste: when you first open a brand new tube, it feels oh so right to put a big ol’ dollop on that toothbrush of yours.
However, when that tube of toothpaste is nearing its end, you’ll find a way to brush your teeth with a smaller and smaller amount–even if you have to twist that tube with every ounce of energy your body can muster.
As it turns out, this principle applies to personal finance, too!
In other words, your expenses will tend to rise to match your income if there’s no deliberate effort to control them.
By opening a new savings account and isolating it from your spending money, you can use Parkinson’s Law to your advantage, and force yourself to live within tighter boundaries.
Instead of seeing a large lump sum in your checking account and feeling the urge to spend, you’ll have a more realistic view of your daily spending limits. This separation can help you curb unnecessary expenditures and build a more disciplined saving habit.
In essence, when your savings are tucked away in a separate account, you’re less likely to rationalize frivolous purchases.
#2: Inconvenient To Dip Into Savings
When your savings are mingled with your regular spending money, the temptation to dip into them can be overwhelming. However, by opening a separate savings account, you introduce a layer of inconvenience that acts as a deterrent against impulsive withdrawals.
The extra step of transferring money from one account to another gives you a moment to reconsider whether that purchase is truly necessary.
This small inconvenience can make a big difference in protecting your savings from being chipped away by impulsive decisions.
Moreover, having your savings in a different account can also provide a psychological barrier. You’re likely to view your savings as untouchable, reserved for genuine emergencies or significant financial goals.
This mindset shift can reinforce your commitment to saving and make it easier to stick to your budget. By making it just a bit harder to access your savings, you protect your future financial well-being from the whims of the present moment.
#3: Out of Sight, Out of Mind
There’s magic in the old adage “out of sight, out of mind” when it comes to saving money.
By keeping your savings in a separate account, you remove that tempting pile of money from view every time you check your bank account. And when you don’t see that money, you’ll be less likely to spend it.
Most of the time, you’ll completely forget about that nest egg accumulating in a separate account, allowing it to grow quietly in the background. This separation helps you focus on your daily budget without the distraction of a larger sum that could tempt you to overspend. Over time, this “out of sight, out of mind” strategy can lead to a healthier, more robust financial cushion that provides security and peace of mind.
Our #1 Savings Account Recommendation
Plain and simple, we recommend the CIT Savings Connect.
Why, you ask?
First of all, it only takes about 10 minutes to set up, and it carries a really nice interest rate.
To give you a little perspective, at the time of writing this, the CIT Savings Connect’s interest rate is 1,760% better than the standard interest rate you’d get with a savings account at Wells Fargo.
Can you say, “no brainer”?
But it’s not just about the numbers. CIT’s online banking and mobile app are incredibly well-designed and user-friendly! This is a big one for me.
Having worked with a bunch of different banks over the years (many of which had a terrible user experience), I can confidently say that CIT’s online banking experience is one of the best out there.
Whether you need to make an emergency transfer (yep, it happens), deposit a check, or do just about anything else you’d want to be able to do, CIT makes it all incredibly simple.
Oh, and to top it all off, there’s no monthly fees and a very-low $100 minimum opening deposit.
To sum it up, the CIT Savings Connect offers everything you could want in a savings account: great interest rate, ease of use, no monthly (or hidden) fees, security, and excellent customer support. It’s the perfect partner to help you reach your financial goals. Why wait? Open a CIT Savings Connect account today and take the first step towards a smarter, more rewarding savings journey.
Click here to open a CIT Savings Connect Account
Don’t Make The Same Mistake I Did! Isolate Your Savings ASAP!
Here’s the hard pill I have to swallow: after hearing this simple tip, I wasted an entire year before isolating my savings, and I regret every minute of it.
For months, I let my savings languish when it could have been growing and thriving in a way that I had never experienced up to that point.
Seriously, I couldn’t take 10 minutes out of my busy schedule to set up a new account???
The good news is that I did eventually do it! And it was one of the best financial moves I’ve ever made!
By isolating my savings, I started to see real progress toward my financial goals. And the bigger my savings got, the more it fueled me to keep going.
So, here’s my challenge to you:
Don’t procrastinate like I did. Go open a brand new savings account, and get in the habit of throwing a percentage of your income at it every time you get paid.
Before you know it, you might just find yourself sitting, stress-free, on a big ol’ pile of savings!
Godspeed!
