7 Tips To Make Your Savings Account Completely Untouchable
Written by
Melanie Grafil, AI Editor
Edited by
Jairo Rodriguez
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As you may have already seen, the economy can and does fluctuate, and so it’s easy to feel uncertian about the best ways to manage your finances. Having a savings account is one way to hang onto your money. Is there a way you can effectively make it, “untouchable,” though?
The concept of making a savings account “untouchable” — not just in terms of preventing frivolous spending but also as a means of withstanding any ups and downs. Here are seven strategies you can try to preserve your savings and ensure long-term financial stability.
1. Make It Difficult to Access Your Funds
The first and foremost step in safeguarding your savings is to regulate how easily you can access these funds. Traditional banking methods often offer too much ease of access, which can lead to impulsive and unnecessary withdrawals. By choosing a bank that requires additional steps for fund transfers or doesn’t have a local branch, you can effectively create a psychological and physical barrier that discourages frivolous spending.
For example, some banks offer “lock-in” savings accounts where funds can only be withdrawn after a certain period or with a significant notice period. This arrangement can deter against impulsive spending and possibly help you start the habit of being disciplined with your finances–if you’re not already.
2. Embrace Automated Savings Plans
Automation is a powerful tool in financial planning. Setting up an automatic transfer to your savings account each payday ensures that a portion of your income is saved before you have the chance to spend it. This “pay yourself first” approach guarantees that your savings grow consistently and helps build a substantial financial buffer over time.
Furthermore, many financial institutions offer options to customize your savings plans, allowing you to adjust the amount and frequency of transfers according to your budget and goals. This flexibility ensures that saving becomes a seamless and stress-free part of your financial routine.
3. Explore High-Yield Savings Accounts
While traditional savings accounts are a safe option, you may find that other options offer better interest rates. High-yield savings accounts or certificates of deposit can be a game-changer. These options generally offer higher interest rates, which means your savings grow faster and are better protected against inflation, for example.
It’s a good idea to look into and compare various high-yield savings choices. Pay attention to things like the annual percentage yield offered, the minimum required and fees for taking out money. Doing this helps you pick a savings option that fits well with your financial plans and how much risk you’re comfortable with.
4. Establish a Dedicated Emergency Fund
One of the pillars of financial security is having an emergency fund — a separate pool of money specifically set aside for unexpected expenses like medical emergencies, losing your job or urgent home repairs. This fund should be readily accessible but distinct from your main savings account.
Financial experts often recommend that an emergency fund should cover three to six months’ worth of living expenses. Keeping this fund separate ensures that you’re not tempted to dip into your long-term savings to cover an expense.
5. Regularly Reassess Financial Goals and Strategies
Your savings strategy should change according to what you need. Regularly revisit your financial goals and adapt. For example, if you set a six-month goal to save for something, but aren’t close to meeting it, you may need to move the finishing line accordingly. Some ways you can try: adjust your monthly savings contributions, switch to an account with a higher yield or even trying out different types of saving or budgeting methods.
This regular review not only helps in keeping your savings strategy aligned with your current financial situation but also ensures that you are always prepared.
6. Link to Long-term Goals
Connect your savings account to specific, long-term financial goals. Whether it’s for retirement, buying a house or funding education, having a clear purpose for your savings makes it less tempting to use the money for short-term whims. By visualizing what you’re saving for, you create a mental barrier against unnecessarily withdrawing your cash.
7. Use Restricted Accounts for Specific Goals
Consider using specialized savings accounts that are designed for specific goals, like individual retirement accounts for retirement or 529 plans for education savings. These accounts often have restrictions on withdrawals before a certain age or for non-qualified expenses, which naturally makes the funds less accessible for everyday use. Additionally, many of these accounts offer tax benefits, which can help grow your savings over time. Using a restricted account wisely can be a powerful strategy in making your savings truly untouchable for everyday expenses while securing your financial future.
Final Take
Transforming your savings account into something “untouchable” involves a combination of discipline, strategic planning and regular review. By implementing these strategies, you can ensure that your savings are not only protected from impulsive spending but are also resilient enough to withstand financial downturns. Remember, the goal is not just to save money, but to build a comfortable financial nest egg that can stand the test of time.
Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.
