Padding Your Bank Account Can Save Hundreds of Dollars

With all of the chaos we deal with in life, it’s no wonder that consumers find themselves being hit with more and more fees due often to simple oversight. Missing a checkbook deduction or paying bills late result in high fees and overdraft charges. Occasionally, one mistake can lead to a domino effect that can add up to hundreds of dollars.

So what can you to do to ensure this doesn’t keep happening? First of all, try automating your bills directly from your bank account. Bills will be paid on time, every time which reduces the risks of bad credit and keeps more money in your own wallet. But what if you are living paycheck to paycheck?

So many families are working hard to make ends meet and find they still come up short in the personal finance department. Many will not be able to automate their bill paying because of the lack of money. However, making strides to change your savings plan can help you get better in your overall financial situation. By padding your checking account, you can virtually rest assured that you will never pay a late fee or a bounced check fee again.

Here’s how:

A Little Pad Goes a Long Way
Padding an account simply means you are adding extra money to your account but not necessarily accounting for it. For instance, if you have $300 in your account on a good week when nothing else is to be paid out, you can rewrite your checkbook ledger to reflect that you only have $100- thus ‘padding’ your account by $200. Mentally, you may know that you still have that extra $200 but over time you may come to forget the pad. Some people will even go so far as writing themselves a check for the pad money but not cashing it – just to keep the checkbook straight.

Keep Padding
If you are struggling now to get by and can’t imagine having any kind of padding in your account, just start with smaller financial goals. Start with an extra $25 in your account that you do not spend. Overtime, you can add and pad a little more money until your ultimate goal is reached.

How Much Is Enough?
Any extra amount is a good start but even a $500 cushion can help prevent overdraft fees and NSF charges. Keep going with your padding as long as you can and don’t consider it a rainy day fund or a savings account. In fact, for all intents and purposes it is better to essentially forget about it.

Other Uses
While the money you are using to pad your account against accounting errors shouldn’t be used for frivolous purposes, you could effectively withdraw from it in the event of a real emergency such as medical expenses, car repairs, or home repairs. However, if you use the money that is padding your account, you must commit to yourself that you will put back the pad money and work towards establishing just as significant savings account for rainy days and other goals