Every year I get a nice little pile of tax savings set aside and every year I think 'I'll just keep it in checking, I'll remember.' And every year I spend it on something dumb like a new monitor or an emergency vet visit. So this year I opened a separate savings account at a different bank. No debit card attached. I have to physically go in to get the money. Feels a bit extreme but honestly it's the only way I trust myself. Anyone else do this or am I just financially unhinged?
Tax Planning
I keep tax savings in a separate account because I don't trust myself
Not unhinged at all. I do the same thing but with a credit union across town. The friction is the feature. If I can transfer money in 10 seconds I will transfer it in 10 seconds.
I just don't trust myself either but my solution was to give the money to my wife. She's ruthless. I get an allowance now. It's humiliating but the tax bill is paid every year so.
Wait, you guys are sapving for taxes? I just cry in April and put it on a card.
That's a terrible strategy but at least you're honest about it.
SpaghettiOptic honestly that was me for the first three years. The credit card interest was like a second tax.
The separate bank thing works until you 'need' the money for something and you're standing in line at the branch feeling like a moron. Ask me how I know. I switched to a high-yield savings account and just renamed it 'DO NOT TOUCH' in the app. Still touchh it sometimes but less.
Renaming the account is underrated. Mine is called 'IRS MONEY' in all caps. My wife thinks it's funny. I think it's the only reason I leave it alone.
Why not just pay quarterly? Then you never have a pile to guard.
Because quarterly estimated taxes require you to actually calculate your income four times a year, which is four more times than most of us want to.
Also quarterly payments don't always line up with when the money comes in. Freelance life is lumpy. A lump of tax savings in a separate account is easier to manage than pretending I know what I'll make in June.
The real trick is forgetting the account exists. I only remember mine when I log in to check my regular savings. Then I see it and go 'oh right, the tax goblin money' and close the app.