How to Streamline Your Finances So You Don't Overdraft Each Month

When is the last time you sat down and looked at how much you are spending, your overall debt and how much you are saving? If you haven't figured this out yet, you probably find yourself in the red each month.

A negative balance means you've had to pay expensive overdraft fees at your bank. All it takes is some simple math and strategic account linking in order to streamline your finances. Obviously, if you can scale back your extra spending, that would also help pad your wallet.

Streamline your finances


Once you get your paycheck

You've probably heard financial experts advise you to "pay yourself" when you receive your paycheck. This means after you get paid, you should funnel your money into savings and a retirement fund, like an IRA or 401(k).

After you pay yourself, do the math to figure out how much you spend on things like rent and your bills. Add up the last three months of your bills and find the average. Adding up your fixed expenses each month will give you a better idea of how much you have to work with after bills are paid.

Link your utilities

First, link qualifying bills, like your gas and electric, to your credit cards, rather than your checking account. You won't be able to link all of your bills, as some may charge you a fee if you try to pay using a credit card. Obviously, don't link it to a credit card that's maxed out. If you've paid off balances on certain cards and they aren't being used, it would be a good idea to keep them active by linking them to monthly bills.

Link your savings to checking

Hopefully you have a savings account to which you can link your checking. If you don't, consider opening one at your bank, and start saving money in that account. It will serve as your extra cushion in case you run out of money.

I like to think of savings accounts at big banks as more of an emergency fund than a means to earn extra money from interest. For example, I have a linked checking and savings at Chase, and keep around $5,000 in my savings in case I know I'll need to move that money into my checking to cover certain purchases.

Opt out of overdraft

If you've unknowingly opted in to overdraft at your bank, it means your purchases will go through, even if you don't have enough money in your account to cover it. However, you'll get hit with an overdraft fee. In other words, that $25 you spent at the grocery store will go through, but you'll also end up paying a $32 overdraft fee. (Overdraft fees vary from bank to bank.)

What you should do instead is opt out of overdraft fees. This way, you won't get hit with an overdraft fee. Keep in mind, however, you might be charged by the place you made a payment to. For example, if you made a payment to Citibank for a credit card payment but it didn't go through, Citibank may slap you with a late payment fee.

Make sure your accounts are strategically linked, opt out of overdraft fees, know the amount you have to work with each month, and you can avoid costly overdraft fees. Finally, when you feel motivated enough, find ways to lessen your spending.

Claire Tak is the editor at, a banking and personal finance website.