What Your Checking Account Is Telling You (That You May Be Ignoring)

By: Marc Guberti

Your checking account doesn’t just tell you how much money you have. It can also be a valuable tool to assess your spending habits — and offer a nudge to make some changes.

Because a checking account is typically used to store cash for everyday expenses like utilities, groceries and gas, it can provide a bird’s eye view of your daily financial behavior. And doing a quick assessment one or two times a month can help you stay on top of your finances and address any weaknesses in your savings and spending strategies.

Here are four signs to look for when giving your checking account a checkup.

1. No cash buffer

If your balance is approaching $0 right before payday, you may want to keep a bit more cash available in your checking account. Otherwise, a single missed paycheck or a credit card payment that’s higher than expected could result in you not having enough money to cover your bills. A common rule is to have enough in your checking account to cover one or two months of expenses, plus a 30% cash buffer.

Financial advisors also recommend keeping enough money in an emergency fund to cover expenses for three to six months in a separate savings account. Consider a high-yield savings account to earn a bit of extra interest. Doing so will allow you to quickly fill any gaps in your checking account should the unexpected happen, like you lose your job.

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2. Subscription creep

Big expenses like housing and utilities may get most of your attention when reviewing your spending, but don’t forget to assess the small expenses that add up. Lower-cost subscriptions, such as for streaming services, can quietly chip away at your balance.

Examine your transactions and credit card statements to see if there are any subscription services you aren’t using, or that you wouldn’t miss. You can also review existing plans to see if you can downgrade them for a lower cost. If you need some help, consider a subscription tracking app like Rocket Money.

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3. Unnecessary fees

Ignoring ATM and overdraft fees may not seem like a big deal one month to the next, but after a year you may be surprised at how much of a bite they’ve taken out of your savings. Plus, they’re often avoidable.

Keeping some cash in your wallet can help you avoid having to use an out-of-network ATM that may come with fees. If you often find yourself paying ATM fees, it’s also worth considering changing banks to one with more in-network machines near you. Avoid overdraft fees by keeping a cash buffer and banking with an institution that offers overdraft protection.

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4. Untracked spending

If you tend to use cash instead of swiping a card, you still want to make sure you’re tracking where that money is going. Review your checking account for large cash withdrawals that may indicate untracked cash spending.

Shifting your spending to using credit or debit cards that can track your spending is one option, though you can also jot down where your cash is going so you can review it during your checking account audits.