Keep a 25 Percent Checking Cushion to Prevent Overdrafts

If you've ever overdrafted, you know it's a simple but frustrating mistake. At best, you call the bank and convince them to waive the fee. It's still a pain. Even the best budgeters among us can make a small checking account flub. But there's a really simple way to safeguard against these flubs: keep a cushion in your checking account.

Financial writer Leah Manderson explains that even the smallest unexpected expense can catch you by surprise and muck up your budget. For example:

  • Gas prices go up a few cents
  • The seasons change and the heating bill increases

These aren't really emergencies, so it's not a proper time to use savings. But in encountering this little pea, you may overdraw your checking account.

How do you end that cycle? What's the fix?

Consider building a better cushion in your checking account.

Manderson suggests a cushion of at least 25 percent of your monthly income, if possible. This is a lot for some of us, but think of it as a way to "insure" yourself against those small, unexpected expenses.


If your checking account is often dangerously close to zero, you might have enough trouble paying your bills, much less saving for a cushion. But if you can, you might consider whether you can find a way to build yourself this small safety net. Because when you're struggling, an overdraft could be more than just an annoyance.

For more on this topic, check out the rest of Manderson's advice.

One Tool to Prevent Overdrafts | Leah Manderson

Photo by Morgan.
