How much cushion do you like to leave in your checking account? You know, the money you try to balance down to instead of zero. In the past, I have simply tried to keep a few hundred dollars in my checking account to avoid overdraft fees.
I’ve recently discovered the beauty of declaring a specific amount in checking as the equivalent of zero, and basing our budget on that amount. For instance, if $500 feels like a comfortable cushion for you, then you should save $500 in your checking account and do not spend below this amount.
If at the end of the month your balance is $528.31, then move $28.31 to your savings account and start with exactly $500.00 as your balance heading into the next month. It’s a quick way to see how successfully you are budgeting without worrying about dropping below zero.
The Frugal Roundup
How I Ruined My Credit Score, and How It Didn’t Ruin My Life. If you haven’t heard, J.D. from Get Rich Slowly is featuring reader stories every Sunday. I really enjoy reading them and this particular one was a great story. (@Get Rich Slowly)
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