Checking account buffer

[skydivingchic]

Like several others, I work one month ahead plus my sinking funds (car maintenance, vehicle registration, medical, etc) are all in my checking account. This leads to a pretty hefty balance in my checking account - somewhere between 6K and 7K. But I have a 5% checking account, so right now it is actually earning more than my savings accounts. Having the one month buffer has been awesome. It no longer matter when in the month I get paid. It also allows me some time to figure out how to fund stuff if something unusual comes up.

[feh]

My mortgage is already paid in August, all CC and utilities are done. I still have $4k in the checking, sure it's crappy but I had to leave it in there because I bought a mattress last month for $750 and DH charged a bunch of work expenses. So next month we're going to have huge CC bills. I am just planning ahead and yes I could transfer it to HSBC our online back but I'm lazy.

Instead I'll make a CC payment midmonth and again on the first. But circumstances are unique in that we usually don't have such large bills just these past 3 months.

Maat, one thing you learn when getting paid once a month, pay all bills first and immediately. I learned that when I got a job paid once a month, it was HARD to go for 4 weeks without a paycheck, and that's when everyone I worked with explained how they all lived a month ahead. It's impossible not to when you only get paid once a month.

I've been working full-time for 20 years (since I graduated from college), and this is the first year that I've been paid bi-weekly instead of monthly.

I really hate it - all bills are monthly, which syncs up nicely with being paid once a month. Now paychecks are out of sync with my bill paying.

It feels messy and askew.

[cptacek]

I just looked at my checking account and there was only $3.75 left in it after a check that I thought had been paid (but apparently hadn't) took out my $100 buffer I usually have. This threw me for a huge panic because I hate when my checking account get under $100.

This is why you need to balance your checkbook. Looking at the total online or the amount on the ATM receipt is an incomplete picture as you have found out. I keep track of every check I (or DH) writes and then reconcile it with the bank to make sure which ones have gone through.

I keep about $500 of "hidden" money in the checking account. It is checks and debit transactions throughout the years that have not gone through. I assume they could go through at any time (which probability is low to none) so I won't be surprised if they do. And, if I dip below "0" in my register, I'm really dipping below "$500". So, no overdraft fee.

[Aleta]

The only check that I don't pay from my regular checking account is my credit card since it's usually a larger amount. I use my money market (which I can write 3 checks and have 3 transfers per month) for this account. Mostly large checks I write from the money market. If it's a check that is due in the early part of the month, I transfer the amount over to the checking account. Why use one of your 3 checks needlessly when you can write it from your regular account. We can write as many checks as we want from there.

[zetta]

I believe it's extremely important to have a month-ahead buffer as LivingAlmostLarge does. I wouldn't be able to sleep at night if I had to worry about the timing of when the money was coming in and when it was going out.

I have my checking account set up with alerts of $3k and $8k. If it ever dips under, even temporarily, I transfer money from savings. When it goes over, I transfer the excess back. I've calculated that my big annual and semi-annual bills (car insurance, property tax, etc.) require me to set aside $875/mo, and this is automatically transferred to savings each month, then transferred back when a big bill comes due.

If you would like to get to a place of month-ahead living, the budget software and financial philosophy at Personal Budget Software - Excel Budgeting Template, Free Personal Finance Spreadsheets is an excellent tool.

[disneysteve]

Another good reason to keep a buffer in your account: Sometimes you may accidentally forget to record a transaction. When I balance my checkbook each month (actually my daughter handles that task) I occasionally find that I neglected to record an online payment. If I didn't always keep extra funds in the account, that could be a problem.

[loulou]

I keep a $100 buffer in our checking account. The way we budget, it really doesn't stress me. I know what needs to be paid with each paycheck (we get paid on the 15th and last day of every month), so when we get paid I immediately pay all the bills, then transfer the amount of $100 to savings.

[snafu]

Since we are paid once a month, often work in a foreign country, & bank fees are waived if the a/c retains a $1,000. balance, we feel secure with a one month buffer.
A conjoined saving a/c controls once-a-year bills like property tax, auto/home insurance, registrations, landscaping fees etc. Each of these bills are divided by 12 and the required sum transfers from automatic deposit checking. In June I added a sum for appliance replacement as DH wants to replace the fridge.

[stressedmama]

I keep about a $200 buffer in our account. I balance my checkbook almost daily and don't get worrried unless our account dips to around $200 which is maybe once or twice a year at most. My husband typically only has reciepts for gas and the grocery store if I ask him to pick up something on the way home. He lays his receipts on the counter when he comes home from work in the same place everyday and I take them and record them (or I check his wallet if he forgets). If we start getting low on $, I let him know and we compensate for it. Compared to most people's replies it may seem low, but it has worked for us for the last 10 years.

[LivingAlmostLarge]

Plus after a weekend away we took out extra money and now I am about to check how much "hold" was put on taking out cash and what fees we accrued doing it. Anyway thank god for the buffer.

[mrpaseo]

200 in my primary account, it's actually part of my emergency fund incase I need some quick cash. I budget my income to a zero balance monthly so this 200 covers any ATM fees or what not.

Ray