Afraid of Your Checking Account Balance No More

October 31, 2022

There is a common fear I hear from my clients. That is, they are afraid to look at their checking account because they’re afraid of what they’ll see.

It’s like going to a haunted house and being afraid of what is lurking around the corner. If you’re like me, or Andy from the Ellen Show, you wish you didn’t have to confront it.

But, a bit like a haunted house, you have to keep moving. You do have to keep an eye on the checking account.

Otherwise, you overdraft, get charged fees, and the problem worsens until you fix it. And at some point, I suppose the nice bank people take away your account privileges.

This fear is often a result of paycheck-to-paycheck living and related circumstances. A report I read recently highlighted just how many people are living this way.

In August 2022, 60% of U.S. consumers were living paycheck to paycheck.

So if any of this describes you, you have lots of company.

Do any of these reasons for checking account fear resonate with you?

  • You are afraid that your balance will be lower than you thought. The uncertainty alone of what it might be is cause for anxiety.
  • If the balance is negative, you have to solve a problem you don't to solve.
  • You are afraid of what the balance says about you as a person. It’s like looking in the mirror when you have a zit you’ve tried to convince yourself was not a big deal. When you look in the mirror, you see otherwise.
  • You worry about what others, including tellers at the bank, would think of you if they knew what your balance was. I was embarrassed—often—about what the tellers at the bank would think about my checking account balance. Nevermind that they look at all kinds of accounts in a day, and don’t know me from Eve.

The solution.

Organize your money in a zero-based budget.

There are two main benefits of this approach:

  1. There will be no surprises about your balance. You’ve proactively told your money what to do and made sure that it stays on track.
  2. You no longer rely on our checking account balance to inform your spending.

If you have a checking account, you are already doing some form of budgeting, whether you realize it or not. You’re trying to keep track of how much money in the overall balance is available to spend.

If I told you I had $10,000 in my checking account, would you tell me I could afford the $2,000 purchase I'm considering?

You might say yes. But I suspect you'd want to know what else I need that money to do. And I can only give you an accurate answer if I have my plan for my money out of my head.

You can do a much better job of organizing your money when you do so in a place where you can look at it, and in a place where it stays organized.

Let me describe a bit more what this might look like:

1. In your zero-based budget, you divide your single blob of money into the equivalent of smaller accounts (budget categories).

2. When you have a spending decision to make, you run it by the category to see if there’s money there for that purpose.

3. If there is, great. Full steam ahead! If there’s not, you look at other categories to see where you can cover it from.

4. You track your spending and keep your budget reconciled to your checking account. This way, you always know how much is available for each purpose, and can adjust as necessary.

Budgeting in this way is how you organize your money once, and keep it organized. The alternative? Like mentioned above, you organize it hypothetically in your brain and try to keep track all month long. #exhausting!

I affectionately refer to this shift as “breaking up with your checking account balance.” It’s a game-changer for those who, like me, used to think that plenty of money in Checking meant I had plenty to spend. And spent most of my time cleaning up the messes that that assumption created.

Do you see how this would break you out of your fear of your checking account balance?

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