How Much Should I Keep in Checking?
Think of accounts as containers for your money; it doesn't matter which account your dollars are in, what matters is what job they've been given. Because of this, we recommend having fewer accounts, and not matching an account balance to a single category or group of categories (with the exception of credit cards of course).
If you're thinking— hey, this sounds familiar—that's because we've mentioned this before (read: a lot), and we stand by our words. On the other hand, if you're wondering what all the hoopla is about, you can join the fun by checking out this this blog post!
Although we're firm believers that less is more when it comes to account structures, we understand that it may take some time to get into the the simplified groove, and during that time, it's important to know how much to keep in certain accounts so that no expenses go unpaid!
When it's important to know how much you need in checking
When payments are being withdrawn from an account, it's important to keep enough in this account to cover your bills and expenses for the month, with a small cushion, to avoid any overdrafts.
How to check (...get it? 😉)
Follow these steps - in either your budget or account register - to determine how much you should have in checking to cover your monthly expenses, without fear of going into overdraft.
Using the Inspector in your Budget:
If you already have more than enough in your checking account to cover those expenses—hooray! You're ready to pay those bills! If you don't have enough in your checking account, transfer funds from your savings to your checking to increase your balance.
Using the Running Balance in your Account Register:
Enter as many Scheduled Transactions as you can (making special note of any bi-weekly transactions, if applicable), including the next CC payment if you use autopay (or schedule your payment in advance). Take note of the Running Balance on the credit card at the time of the next payment.
Now, move over to your checking account. Just as before, turn on "View Running Balance" and add as many scheduled as you can. Then take note of what the Running Balance will be on the date of your next credit card payment.
If the positive Running Balance in your checking account will comfortably accommodate the negative Running Balance in your credit card account, you're good to go! If you feel like it is too close for comfort, move money from savings.
To read more about how to apply these steps in your own budget, check out this blog post!