Out of Sight, Out of Mind

Recently realized just how easy it is to let ourselves be Okay with using stuff that’s easily accessible. And conversely, how difficult it can be to access the stuff that’s tucked away. For example, have you ever shopped at a “buy-in-bulk” big chain like Costco, Walmart, BJ’s, etc.? These chains are great for stocking up on stuff like groceries, essentials, and some even sell liquor and beer.

Well, typically I’m not a big drinker by any stretch of the imagination; however, on one such occasion of doing our monthly buy-in-bulk session, I was tempted to add a gigantic bottle of Johnny Walker to the cart.  The reasoning seemed logical at the time.  Why not have some bourbon in stock at the house?  It’ll be great for when guests are over.  And I’m not impartial to indulging in some fine bourbon on sunny afternoons, when i have the day off.  

What seemed like a bargain at the time slowly turned into just another splurge-purchase.  Because I kept the bottle on top of the fridge, it was always present and easily accessible.  Therefore, over the course of a few months, cup-by-cup I whittled that baby down until there were only ~30oz. left.  Not wanting to stare an empty bottle of Johnny Walker in the face, I brought the remaining few drinks-worth of the fine liquor to a friend’s BBQ; for the party at large to enjoy.

Along these lines, having stuff readily accessible and present brings it the forefront of our minds.  The opposite is also true, where things that are out of sight are out of mind.  The trick then to increase our savings-rate is to put money away where it’s shielded from the ever-hungry reach of the pre-frontal cortex.

Trick Yourself Into Saving Money

How do we successfully bank our hard-earned cash so as not to touch it again?  Well, as I’ve learned from the anecdote described above, the more difficult it is to access your cache (whether it’s literal cash under the mattress, money in a high-yield savings account, a collection of valuable antique liquors) the less likely you’re willing to withdraw from that particular reserve.

Similarly, adding more to your stash should be as painless as possible.  This might sound contradictory, but here’s what I mean:  through automation, you can easily remove small parts of your hard-earned income to be put to use in some form of saving.  But, accessing the actual goods that you’ve accrued should be much more difficult than the contribution component.

For example, I have a savings account with Ally bank (competitive 1.15% APR) that I automatically contribute to each week.  Ally bank is a southern bank, which means there aren’t any actual branches in the greater New York area.  So it’s not likely, or even impossible, to access money from my savings in-person.  Anytime there’s an emergency (which is what the savings account’s purpose is for), accessing my funds requires a regular ol’ slow transfer (3-5 business days) to my checking account.

If I need the money ASAP, I’d have to put the emergency on my credit card(s) and payoff the balances once the funds transfer successfully.

During which, I have ample time to reassess my finances and decide whether whatever the money is withdrawn for is truly worth it.

Why Do I Splurge on Stuff?

Another lesson that may be derived from the simple story above is this:  why did I even buy the Johnny Walker in the first place?  Well, because at the time it seemed like a great deal.

Woah a huge bottle of JW Red for only $39.99?

I probably thought that this bottle of booze would last forever; however, as what happens to most everything in this world, it did not.  Essentially, this was a splurge purchase because it seemed like a great bargain at the time.

Despite the fact that the 40 bucks could’ve been used for gas to power my rideshare-mobile that, in turn, would have grossed a couple hundred dollars.  So, whether it’s in-person or online retail shopping, we’re likely to come across that “I just gotta have it” thing.  There’s something about the right-here-and-now satisfaction that makes these guilty purchases feel so good.  I’m not gonna go into ways to combat shopping habits, or curb retail spending, etc., etc.; because I think it’s a personality thing, and some people admonish the whole “retail therapy,” whereas others embrace it.

Conversely, if you’re interested in knowing how to revamp your savings-rate (to make it better) remember to never touch what you’ve already put away.

Use a bank that has few branches, odd locations across town, and don’t look at your accounts very often.  Forget about your money as much as possible, and you’ll be less stressed.  And possibly less prone to splurging since your checking account won’t allow big chunks to be removed without alerting you.