How Much Should You Have In Your Checking Account?

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)

Frugality On a Whole New Level. Here’s a quick article on taking frugality to the extreme. How extreme have you taken frugality? (@Budgets Are Sexy)

The Definitive Extended Warranty Litmus Test. Len Penzo created a nifty looking chart to help you decide if an extended warranty is worth it.  (@Len Penzo dot Com)

How to Apologize For an Error? Martyr Yourself. Here is an interesting approach to handling errors you may make at work or in life. (@Financial Samurai)

$365 a Year for Food. Think you could feed yourself on a dollar a day? Might be a stretch for even the most frugal of us. Then again, when broke you do what you have to do. (@Smart Spending)

Best of the Rest

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