How do I trick myself into thinking I have less cash on hand?

December 4, 2011 11:36 AM

Budget Hacks Filter: I need to pretend I have less money than I do.

I recently realized it was foolish of me not to have the majority of my money in my checking account, because my awesome credit union pays me 3.25% interest on that account. So yay, extra money every month!

Unfortunately, it also means that the money I used to have shoved aside in savings (out of sight, out of mind) just sits there as part of the total in my checking account taunting me. So every time I log in, I have to think, "Okay, actually, I don't have $X--part of that is regular savings, part of that is for repairs on the house, part of that is childcare money, so really I only have $X-Y-Z."

Have you figured out a clever solution to a similar problem?

Possibly relevant:
* I am a fairly conscientious budgeter and receipt tracker (I use PearBudget)
* I have thought about setting up some sort of extra spreadsheet for divvying up my checking account, but I'd kind of not to have to go around entering data into two separate budgets
* That said, I'm open to switching systems, especially if there's some existing spreadsheet/system/whatchamadilly out there that will do this

posted by newrambler to Work & Money (13 answers total)

Is there a reason to not have 2 checking accounts with them, and just split up your money into the two checking accounts? The answer to this might very well be yes, but you don't mention it so I thought it was worth asking.
posted by brainmouse at 11:42 AM on December 4, 2011

I have the same kind of thing going on (though with fewer categories of "untouchable" money in the checking account) and what I do is I write down how much "savings" should be in the checking account and I absolutely do not let myself go beyond that. Right now I've planned out how much I want to have in the account in July and on the first of every month, I make sure I'm on track for that goal.

I also use a different checking account that I transfer "spendable" money into every payday, and I use that to pay credit card bills and things like that, but I don't know that that's an essential part of my process and I may end up closing it.
posted by mskyle at 11:44 AM on December 4, 2011

I know with my rewards checking, I have to make a certain number of debit card transactions each month, so just not using it for checking at all is difficult.

Basically I use the rewards checking account for fixed expenses like rent and loan payments and for small debit card transactions like small amounts of groceries, drug store stuff, or gas (to make sure I get my 12 transactions a month); the other account is mostly for discretionary purchases.
posted by mskyle at 11:48 AM on December 4, 2011

How much money would you spend per month anyway? Spend that amount. Don't spend any more than that amount. The total number in the account is irrelevant.
posted by phunniemee at 11:49 AM on December 4, 2011

I checked the account rules and it specifically says only 1 of these accounts per person. However you may be able to open one of their non-high-interest checking accounts as well - then you could transfer your actual 'spending money' to that for everyday use. Or if it's important enough to you, you could open a free checking account with another bank and transfer money to that one, as mskyle does.
posted by jacalata at 11:50 AM on December 4, 2011

oh right, it also has the 12 transaction requirement, so the second account in general would be tricky.

1) Twelve or more debit card purchases must post and clear the account (these exclude ATM or PIN-based transactions and must average at least $5); 2) An ACH/Direct Deposit or ACH withdrawal of at least $100 must post and clear the account (internal transfers excluded). 3) You must receive and review e-Statements. If qualifiers are not met, 0.10% APY will be paid on all balances and ATM surcharge fees will not be refunded for that cycle. Account holders that do not meet the qualifiers are charged $1 per PIN-based transaction at non-UICCU ATMs or terminals. Limit one account per individual.
posted by jacalata at 11:52 AM on December 4, 2011

Two accounts. Have one of them get direct deposit from your job and then put some money into the other one automagically. Ignore one of them entirely.

Alternately, your credit union may be able to help you with this via some sort of Christmas Fund automatic paycheck deduction though I didn't see one on the page. Basically I have two bank accounts: a free checking account at a local bank and a bigger savings/checking/credit card account at USAA. The local account is what I use to get cash, pay rent and local bills and think of as "my money" the other account is socked away for the most part and I transfer chunks of money into the main account. The difference between 3% and .5% or whatever you're likely to get at another bank is not a big deal unless you have a fairly big balance, so I wouldn't get too stuck on the missing $5 or whatever, because it will be a bigger deal to have a system that is actually working for you instead of confusing you.
posted by jessamyn at 12:20 PM on December 4, 2011

I used to subtract $1-2,000 from the balance in a register so it would read $728 (say - but really be) $2,728. Too bad this doesn't work online...
posted by lathrop at 12:29 PM on December 4, 2011

I have that same checking account at that same credit union and what brainmouse suggests is what I do - I have two checking accounts. One is for all my day to day transactions, gets no interest and is actually at a totally different bank. The Rewards account at uiccu I use essentially as a savings account - in order to meet the qualifications for the higher interest rate, I split my monthly charity budget into 12 pieces and set up monthly recurring donations at 12 non-profits using my debit card, and then set my direct deposit to put in that amount every month. So a small amount of money goes in and out automatically every month, but other than that, it just sits and grows interest.

I set it up this way so that I could get the decent interest on a chunk of savings while continuing to put the bulk of my spending on a cash-back credit card, but it also serves the purpose of keeping that chunk of money fairly out-of-sight, out-of-mind. Keep in mind, though, that the rewards account does have a cap on how much you can earn the higher rate on, so putting all your money there, depending on how much you're looking at, may not earn interest on the full amount.
posted by colbeagle at 12:53 PM on December 4, 2011

Perhaps you could set up a line item or expense category called Savings Goal and invoice yourself each month like a real bill. This can make you feel like you're actually allocating the funds somewhere instead of feeling like you're free to blow through it.
posted by dragonplayer at 1:12 PM on December 4, 2011

Hmm. I like the idea of the two checking accounts and treating this one primarily as a savings account, but I'll need to come up with some way of meeting the 12 transactions a month thing--I don't have 12 separate bills I could autopay, and I generally rely on using my debit card for groceries and so on to meet that requirement.
posted by newrambler at 1:13 PM on December 4, 2011

The obvious hack is to use this as a savings account and open a new account for checking with a different bank, but I'm guessing that 3.25 percent comes with strings attached that make this harder than it should be. You might still be able to skate by with a few planned transactions.

On the other hand you may find it's a lot of effort to find 12 monthly signature transactions. Online bill pay will usually use ACH, which eats up a lot of the typical transactions. If those "under 25 dollars so we dont need a signature" don't count, I'd have a hard time meeting the guidelines without going shopping more often! And every month you don't qualify costs you close to 0.25% APY.

One alternative might be to ignore the whole incentive checking and move your savings into I series bonds, which pay out 3.08% for the next six months: 0 percent fixed rate plus inflation of 3.08 percent. I'm still looking into this, so be careful. You have to hold them for a year, and the penalty period is five years. TIPS might be a more liquid and higher returning investment.

That said, if you want this checking interest, maybe you try a different system. I use GNUCash and schedule the creation of future dated transactions. This basically plans out my next 90 days of income and spending, and shows me future minimums. You could have all your cash in the checking account, and earmark funds for groceries, rent, recieved interest payments, repairs on the house, childcare money, etc just by recording transactions before they happen. This is trivial for known and predictable expenses, you just enter them with a date in the future; the UI splits past and future transactions with a blue line.

For unexpected expenses, you could make sub accounts per the envelope system. These accounts will just have one transaction to a synthetic account ("savings") in them, making them negative. That negative balance will propagate up the tree to your checking account balance columns. This seems like the best approach:
* you can still easily reconcile your bank statement, because the savings earmarks are in different accounts
* you know how much "savings" you have overall, since they show up in your fake Savings account
* you still get a clear picture of net worth, since it's a transfer from asset account to asset account
* the future minimum balance column will show you how much you can really safely spend without dipping into savings or your budget
posted by pwnguin at 1:17 PM on December 4, 2011

I just tell myself that $4,500 is the zero mark. Works for me.
posted by Chaussette and the Pussy Cats at 1:31 PM on December 4, 2011