I show you how to save money without sacrificing what you enjoy, budget for the future without feeling restricted, develop healthier financial habits that set you up for success, and use financial resources to help you meet your goals.
I’ve read differing opinions about keeping a cushion in your bank account. Some people say they are very efficient budgeters and never need a buffer in their account. Others keep a month’s worth of expenses (or more!) in their checking account. I fall somewhere in the middle.
I believe everyone should keep a small buffer in their checking account. But why? And how much?
I am usually an efficient budgeter. I am always prepared for the usual bills that need to be paid on a monthly basis. However, I am human and I make mistakes. For example, I may forget about the $25 I transferred out of my account to repay a friend for my share of a joint gift. The buffer is there for these one-offs, giving you peace of mind.
Not Too Much
Be mindful of how much of a buffer you keep in your account. I don’t think it’s necessary to keep a whole month’s worth of expenses in there as a cushion. That money can be better used elsewhere, whether in a savings or investment account.
Not Too Little
I like to keep enough in there so that I never have to worry about an overdraft fee. If I am making a big transfer, I typically remember to update my budget accordingly. It’s the little expenses that slip through the cracks. Figure out what your threshold is for triggering your “update-the-budget” reflex. I like to keep my cushion at around $500, and never less than $300. A few small transfers could add up to a couple hundred dollars easily. So, for me, $500 is the sweet spot of not too much and not too little.
Do you have a checking account buffer? If so, how much do you keep as a cushion?
By empowering women to understand their finances, I free them from uncertainty, stress, and fear. My clients go from scared to savvy — transforming into the confident Chief Financial Officer for their family. You can do the same! Get out of debt, save for the future, and splurge on what you want.