Last week Fivecentnickel had a post on how to Avoid Lifestyle Inflation: Create an Artificial Sense of Scarcity. Basically, the idea is that you need to hide your money from yourself so you won’t spend it.
Out of sight, out of mind. If you don’t see the money sitting there every time you check your accounts, you won’t be constantly reminded of its presence, and you won’t be tempted to spend it.
For some people, the "hiding" of money is merely notional. They just open a so-called "savings" account at the same bank that has their checking account. But for many of us, that kind of hidden is not hidden enough. We need the money to be truly out of sight and mind. For us, the money must not be merely well hidden, but in a place we would never think to look.
Which presents problems when the time finally comes to spend it. If you are like me, you may have gone to great lengths to hide money from yourself and need some ideas on where to look for it.
Your 401(k) This is a popular place to stash money. If you read your paycheck carefully you may find an indication that a slice of your hard-earned money is going to this hidey-hole. You may also receive periodic statements in the mail about the account.
However, if you were really clever you might have arranged for these statements to be sent to another address. You might even have asked your company to doctor your pay stub so it appears that you are not saving anything. You should call your HR department and ask if this is what you did. But keep in mind that you may also have told them to lie to you if you ever asked about it, so be persistent. It may take several, maybe even a dozen, calls to find out if you really have money hidden there.
And don’t forget 401(k) plans at former employers.
A Bank Although primarily known as originators of sub-prime mortgages and as a conduit for tax dollars to reach Wall Street fat cats, these institutions are also popular places for storing money. The problem is that there are so very many of them and you are unlikely to have hidden money in a bank with which you normally do business. Start by finding the bank that would be the most inconvenient for you to use. Remember that it probably does not have branches in your area or state. Call that bank and ask if you have an account there. Keep in mind that you may have used another name, so ask if somebody matching your description has an account there.
Friends and Relatives Another popular tactic of money hiders is to give it to a close friend or a relative for safekeeping. If you did this, you almost certainly told them to deny that you gave them anything if you ever asked. So try to bluff them out of it. Call each one up and casually say "I need that money I gave you to keep for me."
Around the House For the traditionally minded, hiding money means a stash of cash someplace nobody would think to look. If you might be of that mind, a thorough search of your house is in order. Skip the sock drawer: that would be the first place that you would that think you would look. Try your spouse’s sock drawer instead. Look under floorboards, and behind large appliances such as the refrigerator and washer/dryer. You may also have hidden cash inside something, such as a cushion, a hollowed-out book, or one of your child’s toys. And don’t forget to look behind picture frames for a wall safe.
Members of your family may ask you what you are doing during this search. Saying that you are looking for the money you hid from yourself is pointless. Because they love you, they will follow your previous instructions and insist that there is no cash hidden in the house. Better to respond to their questions with something non-committal such as "I think you know what I am doing."
In many ways, finding that hidden money is almost as hard as the many years of artificial scarcity it took to hide it. But in the end, it is all worth it. How else can we normal Americans save for retirement?