Keep a Cushion in your Checking Account.

We live in a spend, spend, spend society where many people feel like if they have the money in their checking account account they must spend it. On the other hand people are constantly told to put money in their savings account. Sometimes people will put money in their savings account and in so doing will leave a very thin margin in their checking account, this can backfire.

Depleting your checking account down to a very thin margin routinely is a very bad idea for the following reasons:

#1 You will end up writing bad checks, making bad debit withdrawals etc. Most banks will charge a fee from $25 to $35 per occurrence.  If you often are right on the border of zero this will inevitably happen.

#2 This bad habit of thinking you must spend every penny you have will cause you to never to be able to move forward. You will be living “paycheck to paycheck” for the rest of your life with no stability or financial security.

#3 Many banks will charge a fee for falling below a minimum thresh hold. Usually this fee is only about $10 but even that adds up over the course of the year. Think about this: If you take money from your checking account and put it into savings and then because of doing this you get a fee charge you are likely losing more money on the fee than you are gaining from the meager interest of a savings account.

Keep a cushion in your checking account! The cushion amount should be at least $100 but should probably be more than that. If that’s all you can afford though, at least keep $100 in your checking account at all times. If your bank has a minimum checking balance you should do your best to try to meet it.