7 Ways to Stop Dipping Into Your Savings Account

Man taking money out of wallet
When you are using cash only for your spending, it takes a lot more work to overspend. Photo: Tetra Images/Getty Images

When money is tight or you have those inevitable months when you overspend, it can seem like the easy solution to dip into your savings account to put your budget back into the black. But do this enough times and you may find that your savings account is not actually growing, or you’re not actually making any progress toward your financial goals.

Having to dip into your savings account month after month means you are having issues keeping your budget or planning. Here are seven ways you can stop dipping into your savings account each month, and start building savings instead.

Set Up an Emergency Fund

If you have a separate emergency fund to handle unexpected expenses, then you will no longer need to dip into your savings account to cover unexpected expenses like car repairs or medical bills.

Although using your emergency fund may seem like you are dipping into savings, you really are not because you have earmarked these funds ahead of time to cover these expenses.

Switch to Cash-Only

When having a hard time sticking to your budget, it’s helpful to identify your problem spending areas and avoid them altogether. Another solution? Switch to cash only to pay for the majority of your expenses.

Set up auto debit for all your bills and savings contributions, then see how much money you have left over. That’s how much you have to spend. Take out that amount each week or month, and when it’s gone, it’s gone. When you are using cash only for your spending, it takes a lot more work to overspend since you have to actually take the money out of the bank.

Move Your Savings to Another Bank

If you put your money in a different bank than your debit card, or open an online savings account, it slows down how quickly you can access the money, since you have to manually transfer it, then wait for the transfer to clear. 

This can help curb impulse purchases, but you still have access to the money if you need it. You can have your money automatically transferred into this account each month. It makes it easier to allow the money to grow instead of relying on it to cover your overspending.

Adjust Your Budget

If you are consistently dipping into your savings, this is a sign that there is something wrong with your budget. You may find that you need to adjust your spending in your grocery category or other areas to cover increasing costs in utility bills.

Taking the time to write down your spending each month, then adjusting your budget accordingly will make a big difference in how much you can effectively save each month. You may be surprised at how much the small daily expenses are really costing you.

Find Additional Income

It may be that you are not making enough to cover your expenses each month. If you are dipping in to cover your basic expenses each month and not to cover emergencies or overspending, you will need to find additional sources of income or look for a new job.

Increasing your income can make it easier to save. Picking up a second job that allows you to earn tips can also help you cash flow any smaller emergencies that may come up.

Find Ways to Cut Your Other Expenses

If you are regularly dipping into your savings, it may be that you took on too many other responsibilities such as buying a car or house that you cannot afford. This can really cut into your ability to cover your necessities or feel like you are enjoying life.

You may need to cut extras like cable television or your gym membership to make ends meet and work toward your financial goals. Additionally, you may need to take more drastic actions like selling your home or car and downsizing to something that you really can afford.

Reward Yourself for Milestones

Another way to stop dipping into your savings is to reward yourself as you hit each milestone. Start with smaller rewards close together to help you build momentum, and then space them further apart and give yourself bigger rewards as you reach your goals.

For example, for your first $1,000 saved, you may reward yourself with a video game or a new pair of shoes. Once you reach $10,000, you can reward yourself with something a bit nicer like a weekend vacation or something similar. 

Updated by Rachel Morgan Cautero.

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