The hack

“I’ve changed account details of all my cash back benefits like Vitality from my current account to my seven day notice account! Even my work expenses get paid into my notice account! It works a treat! It bypasses the very liquid current account and I can’t touch it!  If I want to, I have to think about it for seven days – that’s generally enough time to avoid bad decisions.”

Rory Button

Why we love it

We discussed Rory’s idea in this episode of The Fat Wallet Show.

Rebates, refunds and cash back benefits can easily feel like free money. We forget that we pay for it in some way – whether it be a membership to a loyalty programme or tax. The “free” money is your hard-earned cash coming to you through time. It’s time travel money.

Thoughtless spending is a wealth killer. We understand this intuitively, but most of us can also feel it in our finances. It’s the expenses you feel embarrassed about when you’re out of cash at the end of the month – clothes or board games or eating out.

Rory’s idea does two important things: it protects your time traveling cash and it keeps you out of your own way. It won’t stop you from having bad financial habits. Redirecting your rewards and rebates to a different account won’t make any difference to your spending. However, it does limit the amount of thoughtless spending you can do. It also allows your time traveling money to continue its journey into the future.

This idea ties in with services like Stash. It might not seem like it in the moment, but small amounts of money invested regularly can become a significant nest egg over time. If Rory invested that amount into an index-tracking product once a year, it could be game changer in retirement.

A note on emergency funds

While it’s important to have access to cash in a pinch, you never want your cash to be lazy. Finding a balance between an account that’s easily accessible and also pays decent interest is tricky. Notice accounts aren’t a bad way to go because of the superior interest they offer, but you want to be sure that you have immediate access to cash when you need it. If you want to have a notice account, you could solve your cash-flow issue by:

1. Having a credit card to carry you over until our money clears.
2. Keeping a small amount of cash in a normal savings account to hold you over until your cash clears.

Remember, an emergency fund is what stands between you and cashing in your investments. You never want to be a forced seller, because your investment might be making a loss when you need to sell.

Each week, we receive incredible money hacks from a growing audience. In this blog, we share our favourites and why we love them. If you are a financial Master of Efficiencies, share your money tips with us by sending an email to hacks@justonelap.com.