I have to give credit, where credit is due. The inspiration for this post came from Big Law Investor’s Make Investing Harder, Not Easier. It’s a great read about how making advances in life, especially when it comes to saving and investing, shouldn’t be easy. In fact, the harder things are, the less people are lining up to accept the challenge. Those who do choose the more difficult path, are the ones most likely to succeed.
It got me thinking about why good money habits are so hard to setup and maintain. Is it because we were never taught at home? Are we not disciplined enough? Do we lack the self-confidence? I would venture to say all of the above and most likely a few others.
Maybe the only way we can break such bad habits is to force ourselves into situations where we have no choice but to figure it out and move forward. In the comment section of Big Law’s post, Financial Muse nailed it, stating that cash is less accessible in an investment account versus a savings account. Why? Because it is linked to the checking! It’s no wonder we give zero consideration to overspending and never keeping to our budgets, we have this safety blanket.
- Unlink your checking and savings (let the fear of that $25 overdraft fee motivate you),
- Determine the smallest amount possible to retain in your savings (w/o incurring penalty),
- Move the majority of your savings into CDs, open a brokerage account, or any other savings/investing vehicle that makes it hard for you to access the money instantaneously, and
- Perform a budget deep-dive to see how much you can add to your new investment account each week/month.
I am willing to bet, the hardships endured with this challenge create a new found discipline. Over time, this learned behavior will become second nature and linking the accounts, again, is more for convenience purposes than safety. The ultimate question is whether or not you slip back into your old ways?
Good luck and let me know how it goes!