Prevent Overdrafts: The Checking Floor
What Is A Checking Floor?
A checking floor is a way to prevent yourself from overdrafting a checking account. It is similar to the overdraft protection offered by your bank, except that it is free, and doesn’t require a large amount of reserved money.
The checking floor is an amount that you leave in your checking account, but subtract from your balance without removing it from your account. This gives you an invisible level of money to insulate against an accidental overdraft.
How To Set Up A Checking Floor
You must decide on what amount of money to leave as a reserve. It depends on the size of checks you write, and what your personal level is. During my student days, when money was non-existent, I had a level of $25. Now my level sits at $200.
To use this, simply subtract the amount from your balance in your register. This works really well for electronic tracking, since you can date the transaction as January 1 and save yourself the necessity of remembering it. If you do a manual register, highlight the transaction so that you can easily find it again.
Benefits Of Flooring Checking
Using a checking floor will save you the worry of accidentally overdrafting your account. This is not an excuse not to balance your checkbook; but it gives you a little bit of breathing room from the possibility of math or bank errors.
Photo by Motleye
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