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If you’re like most people, money in your checking account is what you use to pay your bills, from your daily coffee shopping to your rent and car payments. That’s why it’s important to have a clear idea of what your balance entails, even if that means checking your account every day.
Get into a rhythm
If your monthly expenses and income are predictable, you may not need to review your checking account daily, but rather every few days. Likewise, if you have a big cushion in your checking account, you can probably get away with checking it out once a week or even once every two weeks.
But you should actually check your checking account balance every day if the following scenarios apply to you:
- Your income is variable and/or you are not paid on a regular schedule
- Your bills fluctuate a lot from month to month
- You live paycheck to paycheck and usually don’t have extra money in your checking account beyond what your monthly bills cost
- You are about to make a larger than usual purchase
If you don’t know exactly what your checking account balance looks like, a few things can happen. First, you might splurge on something you think you can afford, only to realize you’ve found yourself with insufficient funds to pay your essential bills.
Additionally, you might find yourself in a scenario where you swipe your debit card or make a payment from your checking account when you don’t have the funds to cover it. In this situation, one of two things will happen: either the transaction will not go through, or it will go through, but you risk overdraft charges.
Many banks allow customers to transact even when their current accounts do not have sufficient funds. But usually they don’t do it to be nice. Rather, they charge expensive overdraft fees for this privilege. While it’s worth noting that some banks have removed overdraft fees, or at least reduced them, it’s not a universal practice.
Knowing how much money you have in your checking account is important, even if it means taking time each day to check your account. In fact, it’s a good idea to make checking a checking account part of your daily routine. You may decide to quickly check your balance just before you start your workday. Or maybe it’s something you do at night before bed. Go with what suits you best.
Give yourself a financial cushion
As a general rule, it’s a good idea to keep some extra money in your checking account beyond what your monthly bills cost. That way, if there’s a month where those bills go up, you’ll be less likely to find yourself in a situation where you overdraw your account.
Another solution is to have a good amount of money in your savings account. If you keep your savings and checking accounts at the same bank, you will usually be able to transfer money from one account to another instantly. So if you find yourself in a situation where you need to pay a $300 bill in your checking account but only have $100, you may be able to immediately withdraw $200 from your savings to cover this cost and avoid unnecessary costs.
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