If you’re struggling to stay on a monthly budget, the solution might not lie in a fancy app or complicated spreadsheet, but in your humble bank account.
Whether your goal is to prioritize essential expenses or curb the takeaway habit, you can use your bank account to manage your money, not just keep it. Try these tactics out.
1. Keep your checking account low on purpose
A simple approach to combating overspending is to lose sight of your money. A low checking account “keeps temptations at bay and increases the chances of you sticking to the plan,” Anand Talwar, manager of deposit and consumer strategy at Ally Bank, said in an email. If you have just enough cash on hand, you can meet your needs without breaking the bank or immersing yourself in money that can be used for savings. If you opt for a low checking account, use an account with no overdraft fees or easy ways to avoid them in case you spend more than you want.
2. Split your money into 2 different checking accounts
One way to keep your checking balance low is to split it up. Pamela Capalad, a certified financial planner in New York City, recommends two accounts. An account is for recurring expenses, with a buffer for variable expenses such as electricity or gas. The second is for discretionary spending, that is, making purchases that are not essential but nonetheless important or useful. That way, you know exactly how much of your disposable money is left for the month, says Capalad.
3. Use automatic transfers to secure money for essentials
If having two checking accounts is too cumbersome, you can save money on necessities like rent and utilities by moving cash to a savings account with automatic transfers. Then set up another automatic transfer to get it back to your checking account in time to make payments. If you’re using a savings account this way, check out how many free transfers you can make each month. There might be a limit, though, including some accounts high yield savings accounts, currently allow an unlimited number of withdrawals per month.
4. Save your savings with a bank other than your checking account
People can fall into the trap of using the sum of their checking and savings accounts as their spending budget, Capalad says. Keeping your accounts with segregated banks so that you only see your checking balance can help you avoid spending more than you intended. This tactic also makes it harder to transfer savings quickly when you’re tempted to spend more.
5. Enable the balance alerts
Some banks will send a notification when your balance is low so you know when to hold back purchases that could cause you to go over your budget or even go overboard. You can often receive these notifications via SMS, email or as a notification through the bank’s app. More targeted notifications may also be available in your account. For example, Huntington Bank’s heads-up and spend setter tools let you set budgets to track expenses by category and get notifications of your status. So if you set up a $ 100 monthly food budget, the bank will notify you when you’ve spent near that amount in restaurants.
6. Try restrictive features to contain expenses
Find an account that allows you to take a more rigorous approach to avoid over-spending. With Ally Bank’s card controls, you can, for example, set spending limits for certain transaction amounts or certain categories of merchants. A Discover checking account allows you to temporarily freeze your debit card to avoid spending – certain fees will still apply, but you won’t be able to make new purchases.
Whether you are familiar with the idea of budgeting or new to it, there are ways you can use your bank account to keep on budget. You may not get proper budgeting on the first try, or even the first few tries. “Remember, this is all an experiment and it’s not a pass,” says Capalad. “You will find the system that works for you.”