Senate Cents: A Financial Wellness Blog

Saving money isn’t that hard. What’s hard is keeping money saved.

It’s too easy to cut expenses in one area only to spend more somewhere else. What you need are some ways to trick yourself into saving money that actually last.

1. Automate it

Set up automatic transfers, and you likely won’t miss the money as it’s whisked from your paycheck to your retirement fund (for example) or from your checking account to savings.

2. Hide it

Part two of the out-of-sight, out-of-mind approach is to make sure you’re not regularly reminded that you have this money. Set up separate savings accounts that our separate from your checking account, so you’re not seeing your savings balance every time you log on. Sign up for paperless statements for retirement accounts, and then don’t check them more than once or twice a year. (But don’t ignore these accounts entirely — set up text or email alerts for any withdrawals or unusual activity so you can catch fraud.)

3. Name it

Labeling an account with its purpose can be a powerful deterrent to tapping the money for other uses. Online banks allow you to set up multiple sub-accounts at no extra cost, and each one can be given a name: vacation, property taxes, new car fund, holidays and so on. It’s a lot easier to dip into a nameless savings account than one that says “Dream Trip to Bora Bora.” The names make you think about what you’re really sacrificing when you spend the money thoughtlessly. You may not be able to rename your employer retirement fund, but you often can input nicknames for IRAs and other brokerage accounts.

4. Lock it up

You should keep at least $500 cash easily accessible for small emergencies. Beyond that, consider creating some barriers to accessing the money. Certificates of deposit can be a good option for savings accounts, since you pay a small penalty if you break into them early. If you’re tempted to cash in retirement funds, remember that taxes and penalties typically will equal 25% to 50% of any withdrawal.

5. Divert it

Every time you cancel a subscription, disconnect a service or pay off a debt, divert that monthly payment into savings.

6. Save your windfalls

A windfall is defined broadly as any extra money that unexpectedly lands in your lap: rebates, bonuses, refunds (including your tax refund). Carve out 10% to spend any way you want and then save the rest.

7. Make it a game

Some people save every $5 or $10 bill that wanders into their wallets. Others stuff every $1 bill they get into a change jar at the end of the day. Every month, feed the extra money to your savings account.

8. Save your raise

Got a 3% raise? Boost your 401(k) or IRA contribution by at least 2%. You’ll get a little extra in your paycheck while putting most of your raise to work for your future.