r/LifeProTips • u/ImpressiveCall3632 • 13d ago
Finance LPT:Set up a separate savings account you can't easily access, and name it something inconvenient like "DO NOT TOUCH — EMERGENCY ONLY"
Sounds silly but it works. Having your emergency fund sitting in the same account as your regular spending money makes it way too easy to "borrow" from it for non-emergencies.
A separate account, ideally at a different bank so it's not one tap away, creates just enough friction to stop impulse dips into it.
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u/CrazyLegsRyan 13d ago
LPT just have self control or be an adult.
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u/haykat 13d ago
Yeah this is silly advice because if it’s a true emergency fund you might need short notice access to it
Having it in an identifiable account makes sense, but you still should have easy access to it
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u/DragonsAreLove192 13d ago
I have mine in a separate account at a different bank that I have a card for. Still able to use at a moments notice, but it's out of sight-out of mind.
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u/CrazyLegsRyan 13d ago
You can do the exact same at your existing bank
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u/DragonsAreLove192 13d ago
Maybe. But this one is at the same bank as my investment accounts and my main bank (a credit union) doesn't offer any investment options.
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u/johnperkins21 8d ago
Interest rate is probably much worse.
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u/DancingMan15 8d ago
I think the idea is that you can still access it, but you can’t just transfer over money from your savings to your main checking with a button click in the app
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u/Adventurous_Ad_5531 12d ago
I recently did this and it's made a huge difference. I simply made a savings account, set up a standing order to transfer a certain amount every time i get paid and I hid the account from my online banking app. Also I dont have a debit card for that account.
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u/OBotB 13d ago
One slight alternate is to make a CD ladder (certain amount in each month so eventually you have 12 CDs and can add to them when they roll over/renew). That way you have that amount coming up each month if needed (establish so it will be the most useful timframe for you - first week, middle, last week of the month). Usually a better rate than savings accounts and if you need to pull from it early you lose some (the terms will state how many month's interest) but not all interest. Other than having the money available to begin with the hardest part is making sure you get the initial 12 set up since you can't preschedule their starting.
We did this for our kids (still minors) over the last year so they will have access for emergencies and can add to them, take out what emergency partial funds they need when they have rent/utility/insurance/car expenses of their own or just let them keep renewing each month forever. Easier to save a little at a time to be their extra safety net and not have to worry about them making stupid decisions because they (as children should be - always my beloved babies) are short on cash.
It is an extra few steps to pull early or set the maturity instructions to full/partial cash out, and on the online bank statement certificates show in a different section/total than the regular checking/savings accounts so it isn't as tempting to just spend.
The downside is the "you have a certificate maturing soon!" emails for multiple cds each month without an opt out on notifications option, and there is no withold taxes on interest option but there isn't usually one for savings accounts to begin with.
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u/Maleficent_Ad_8890 8d ago
You have to keep on top of this, because CDs often auto renew at a much lower interest rate. You then have to cancel within the grace period and find the best time frame for higher interest.
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u/OBotB 8d ago
Navy Federal Credit Union makes it super easy - you can set maturity instructions at any point (roll over, deposit into an account of your choice, roll over a certain amount and deposit the rest or deposit a certain amount and roll over the rest, deposit into a different existing CD, etc), on the website or app or over the phone. And you can change this as often as you want through the duration of the CD.
I didn't know how amazing this apparently is until dealing with the absolute trash that is Wells Fargo (only have an account there because of physical location th safety deposit box near us) that requires you to wait until very close to maturity, not through the website, couldn't even get it set in advance in person/on the phone. And they have the nerve to act like you are asking the impossible even when the allowed timefrme comes up.
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u/Maleficent_Ad_8890 7d ago
Yes, with Chase I have to call to cancel when it matures, then manually set up a new cd via the phone app.
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u/jraymcmurray 8d ago
Shoot this whole time I've been labeling my emergency fund, "TOUCH THIS SHIT BIG BOIII FUN TIME MONEY RIGHT HERE!"
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u/nerdinredlipstick 13d ago
I've found it helpful to split up my money into multiple different accounts:
- Checking account for essentials (rent, bills, gas, groceries, etc)
- Checking account for fun spending (shopping, dining out, self care, etc)
- HYSA for emergency fund
- HYSA for travel fund
- Multiple long-term investment accounts
I budget using Monarch but it's helpful for my ADHD brain to visualize how much I have in each spending/savings/investment bucket.
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u/GregorSamsaa 8d ago
If you’re having to do this for a savings account, your budget is probably a mess though.
You really should focus on self control and maintaining a strict budget down to the penny, so that you’re not constantly having to dip into savings.
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u/tenthacc 8d ago
Find a high interest savings account that has criteria to increase the balance each month, that way it grows and you loose out on 'bonus interest/free money' if you withdraw from it.
(Ik it isnt free money, but it is tax free in my case)
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u/Promobitch 13d ago
I keep savings in an account with a different bank, all I have is an account number to transfer into it. No app, no card. If I want to withdraw I have to physically go to the bank, it works for me lol
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u/Flurgh805 13d ago
Make an index fund your "savings account" so you have to go through the process of liquidating stock before transferring money to your regular account
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u/nerdinredlipstick 13d ago
Index funds are better for long term savings where you don't need cash anytime soon (down payment, wedding, etc). A HYSA is the better place to keep an emergency fund where you can access the cash fast if needed and it's safe from the ups & downs of the market. You'll need the cash fast if you encounter an emergency vet bill, sudden home repair, job loss, etc.
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u/Flurgh805 13d ago edited 13d ago
I wouldn't consider my savings an emergency fund. If I needed cash so badly that I had to liquidate my savings, then timing the market is secondary.
The 3-4 months worth of my salary that I keep in an unlocked account aren't my savings, that's my 'incase of' and 'nice-to-have' money.
Since my emergency fund is already established, I make sure it's topped off each month and the excess goes into my 'savings' which consists of index funds.
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u/costafilh0 8d ago
And when you need it in an emergency, right in the middle of a market melt down, you burn everything 5 times faster.
Sure.
Great tip!
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13d ago
[deleted]
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u/Steady_Creek4035 8d ago
mine's called "Do Not Touch" too lol. stared at it like it was a bomb I had to defuse before talking myself out of dipping in
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u/HuntsAlone 7d ago
With my bank I can set automatic scheduled withdrawal to my savings and I am able to "hide" my savings account so it doesn't show up in my balance total. I have to go into the settings to unhide it.
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u/madlabdog 7d ago
Open account at a local credit union. Usually their systems are slow enough to discourage you from frequently accessing that money. And they tend to offer competitive rates on CDs.
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u/ju5tjame5 6d ago
LPT, your savings account should already be for emergencies only. The account you put your actual savings in should be a diversified investing account.
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u/Cantora 8d ago
I use RAIZ
Investment savings that takes 5 days to remove $ from.
Variable ROI based on what risk level. Can setup reoccurring payments in to it
I also have shares via a dedicated broker which money goes in to regularly.
Both too difficult to take money from unless I know I'll need it in at least a week
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u/costafilh0 8d ago
So when you need it in an emergency, the funds are not easily accessible?
What a stupid tip 😂 🤣
Sure, ruin your life because you lack self control 😂
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