How not to Overdraft your Checking Account

When it comes to finance and managing your money, one of the most basic (and vital!) aspects of building wealth and financial security is controlling the money that goes in and out of your bank account on a daily basis. Failure to do so results in quite a number of negative consequences:

1. You’re in the red: If you accidentally overdraft your account, imagine your dismay when you go to check your balance at the local ATM and get a negative number! Psychologically this can quite disappointing, and makes you feel like you have to work uphill just to get back to $0.

2. Fees: Many banks today will happily let you go below $0 on your account, because they can then charge you a fee for the privilege. My oldest brother had a few such occurrences, and finally called the bank and told them never to allow charges for overdrafts. This way no matter what, he could never smacked with a 30$ overdraft fee even if he did make a mistake.

So what is the best way to tackle this problem? You have a few options available to you. Firstly, you will likely want to start tracking the money that goes in and out, and why. Recently there have been a ton of tools developed online that allow you to track the day to day expenses. Sites like and Wesabe will automatically upload your bank statements and let you label and chart your expenses. Want to know how much you spent on gas last month? You can filter out all other charges and show a nice, neat graph displaying just how much gas your car guzzled.

Another option is to simply bring a small pad in your purse or pocket. While I’m not a big fan of paper tracking myself, my girlfriend swears by this method. Every time you purchase something or schedule a payment for a bill, simply record the numbers in your notebook. At the end of each week, tally up how much you have spent and how much is left in your bank account.

Regardless of which method you think is most effective, the key to successfully managing your money is to track it. You don’t have to pinch every penny or create a complex spreadsheet that calculates all the money you spend day in and day out, but you’ll want to have at least a general idea of what you have and where that money needs to go. In this way you’ll avoid any hardship from unexpected overdraft charges and not have to worry about how far into the red your bank account has gone.

Good luck!