8 Smart Money Hacks When Your Checking Account Keeps Hitting Zero
According to a survey conducted by Deposit Accounts earlier this year, 37% of Americans have less than $500 in cash savings, and 14% admitted to having no savings.
While it’s understandable that financial situations can change during tough economic times, it’s important that you do your best to be proactive about ensuring that your account doesn’t go into the negatives.
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These are eight smart money hacks readers can use if their bank account keeps hitting zero.
1. Figure Out What’s Holding You Back
“You can only change behavior when you know what’s causing it,” said AJ Schneider, a financial coach and the founder of Beyond The Green Coaching.
The goal is to identify what’s holding you back from saving. You may want to ask yourself some of the following questions:
Is it time to try to ask for a raise or find a way to increase your income?
Should you adjust your budget and spending plan to account for increased expenses?
Do you have too many fixed expenses that are making it difficult to save?
2. Review Your Recent Spending
Schneider suggests that you review the last three to six months of spending so that you’re not making a budget based on delusional assumptions. He added, “You don't know how you spend it until you look at it, transaction by transaction.”
The harsh reality is that you can easily forget about transactions and expenses. By identifying your spending patterns, you can control other variables and be realistic about your situation.
3. Use Automatic Savings
“By far the best action someone can take in terms of improving their cash flow is scheduling an automatic withdrawal to a savings account on the day a salary hits the bank, even if it’s only $25 or $50,” said Cody Schuiteboer, financial expert and CEO of Best Interest Financial. “The amount itself is irrelevant, but the removal of a choice definitely makes a difference.”
Once the money leaves your checking account, you no longer have easy access to it, and this system can help prevent spending. By automatically transferring the funds on payday, you don’t even see them, and you’re able to save without any additional friction.
4. Set a Floor for Account Activity
Schuiteboer suggests setting a floor for account activity, such as $200 or $300, so you don’t wait until your account reaches zero. He believes that by implementing this little trick, people will be prevented from overdrawing on the account and falling into an endless spiral of fees, while also creating a buffer.
5. Cancel Unnecessary Subscription Services
The experts pointed out that many people underestimate the number of their recurring monthly payments. By conducting a quick audit of your spending over the last six months, as suggested earlier, it may become apparent that you’re paying for services that you’ve forgotten about. You can easily free up some space in your budget by cutting out the subscriptions that you don’t need anymore.
6. Create Specific Financial Goals
Schneider recommends creating three to five goals you want to accomplish so you have a purpose for saving. Goals could include setting up an emergency fund, contributing to retirement, going on a fun vacation, and so on. Once you have a reason for saving, you may be more motivated to ensure your account doesn’t hit zero again.
7. Make a Realistic Financial Plan
The experts agree that you want to create a realistic financial plan that you can actually follow. You want to create a budget based on your spending, with the goal of spending less than you earn. By creating a realistic plan that accounts for all your expenses, you can put a system in place to help you avoid your account reaching zero.
8. Try To Save One Month's Worth of Expenses
Schneider believes that the best way to avoid bringing your checking account to zero is to save one month of expenses and keep it in your checking account as your first line of defense. You can combine a few of the money hacks on this list to help you accomplish this.
Schuiteboer concluded, “Ultimately, my objective as a financial advisor is to see clients maintain a month’s worth of expenses on top of what comes from salary and thus prevent the zero-balance problem from occurring again. Once it reaches this point, the problem disappears, the income will cover the previous month’s spending, not the current expenses.”
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This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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