Rethink Your Checking Account



Checking is the most straightforward of the 3 expense categories. Most people have a checking account where they keep the money that they need to pay their monthly bills. However, most people also take that account for granted, writing out those magic pieces of paper whenever they want something, without really thinking about the reality of the money they are spending.

To be successful with your personal or household budgeting, you’ll need to rethink the role of your checking account.

In this system you will continue to write checks or use online bill paying for your core expenses like rent or mortgage, utility bills, vehicle payments, and insurance payments, just to name a few examples. But you’ll do one thing differently. Simply, you’ll pay by check only for those expenses for which it’s not feasible to pay with cash.

The key is to make sure you keep careful track of every check you write and every online transfer you make. Accurate, detailed recordkeeping is really important. I can’t emphasize that too much. If you don’t carefully track the money coming out of your account you incur overdraft fees and bounced-check charges. These fees are expensive and will eat away your income, causing your credit and debt spiral to speed up – all because you were careless. You can change that!

Here’s the most important rule about your checking account:

Do not write checks for anything that is not included in your budget. Period.

Read that sentence again to be sure you understand how critically important it is...

It is too hard to stay on track if you allow yourself to write checks for non-budgeted items. It’s just too easy to write a check to buy something you want. It’s not painful the way it is when you pay with cash, so it’s easy to spend money this way without really thinking about it. A personal rule of NO CHECKS will make you stop and think before you spend, and thinking before spending is a critical part of successful budgeting.

As you work this system, the balance in your checkbook should very closely mirror the balance on your monthly budget planner. Balancing these two budget tools against each other will keep you on track, and give you confidence as you gain control of your finances.




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