How to Pad Your Checking Account

How To Pad Your Checking Account

Padding your checking account is probably the easiest and most painless way to build up a little cushion. Having a cushion can help take away some of your financial stress. It’s also one of the first things you can do to start your debt-free journey. I’ll tell you how to pad your checking account easily.

It’s Like Having a Reserve Tank

It reminds me of my very first vehicle. It was a 1987 Ford F-150. It was single cab and long wheel base with the original sleek black paint job and maroon interior. My parents bought it for me from an elderly gentleman. On humid days, it smelled like pipe tobacco on the inside.

It was gorgeous. I named it Bubba.

At the time, Bubba was 15 and I was 16. We were friends. (Yes, I’m still talking about the truck.)

Me and Bubba

Here’s my point: Bubba had two gas tanks. That means, I always had a cushion. Theoretically, I could never run out of gas as long as I kept my reserve tank full.

There was a little switch on the dash so when tank #1 ran low, I would flip the switch to tank #2 and I would have a full tank again.

The key here was that I was never supposed to let both tanks run dry. I would like to say that I always did what I was supposed to do but I can’t. I still remember my brother and I sitting on the side of a neighborhood road waiting for my church youth group leader to rescue us with a couple gallons of gas in a little red gas can. The girl with TWO gas tanks needed a few gallons to make it to the gas station.

It’s not fun to run dry. Not having a cushion can leave you in scary situations.

Many Americans Are Running on Empty

80% of Americans say they would also benefit from deeper guidance on the steps to take toward making their savings efforts even more impactful.

The survey, conducted by OnePoll on behalf of Chase, showed 40% of adults would have difficulty covering an unexpected expense of just $400.

This echoes the findings of a recent study by the Federal Reserve, which found 40% of the country admits to having $400 or less in their savings accounts.


What Does It Mean to Pad Your Checking Account?

When I was in college, money was always tight so I would “hide” money in my checking account for emergencies. I called it “padding my checking account.”

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.

Leave Debt Behind

How to Pad Your Checking Account

This is simple. All you have to do is deduct money to yourself. It’s like writing a check to yourself but never cashing it. In my checkbook register, I would always write the date, make a note that the money was “hidden” or “padding”, write the amount, and deduct it from the total.

This means that the running total in your checkbook register will never match what your online bank account says. Your online banking account will always be higher. That’s why it’s important to always only refer to your written checkbook register.

If it helps to keep your records straight, you can actually write yourself a check and just put it in a drawer. That way you can easily balance your check book to match your total online or on your paper statement.

I didn’t write myself checks because I didn’t want to waste a check. I would just write it down like it was a debit card purchase. If I needed to find some of that money again for an emergency, it was like looking for hidden treasure.

I would flip through my checkbook register until I found $20 hidden (or whatever I needed). I would cross it off and make a note that it was no longer hidden. Then, I would “deposit” it back into my account in my register.

It’s Best to Forget About It!

The best practice here is to actually forget about the money. Deduct it from your account in your checkbook register and pretend like it’s not there.

If you keep this up then it won’t take long to build up enough cushion in your checking account to take away a little financial stress.

The additional tweak I’d suggest is in the mechanics of how to fool yourself into forgetting that $1,000 is there. Make an entry in your checkbook (kids: ask your parents) as if you’d written a check (or actually write the check if you’d like) to “Cash Reserve” or “A More Secure Future” or something similar. (In fact, if you don’t currently have an extra $1,000 to put into a reserve, then writing checks in smaller increments for a few months is a painless way to build one up – just put the checks in a drawer.) This way, when you balance your checkbook, you don’t have to remember to add (or was that subtract?) the extra money – it just shows up as an uncleared transaction.

You will sleep better having that cushion in your checking account, and it’s a powerful way to build some savings momentum while putting yourself on 2.5X firmer footing than almost half of Americans.

Yield Talk

How Much Is Enough?

If saving money is a difficult task for you, then start small. Start with $20 a week. Then, move up to $50. Try to get a $500 cushion as quickly as you can.

Always remember that you are supposed to forget about this money. It’s not money you are saving until you find the perfect shoes on sale. This is “hidden” money that should only be “found” in an extreme emergency.

In college, a $500 cushion would have felt like I won the lottery. I was going to school full-time and working at a daycare in the afternoons. I even worked at an MRI office for a while and sometimes my hours would stretch into the night. However, I never made much money. It was barely enough for groceries, gas, cell phone bill, etc.

The most cushion I could ever afford was around $40.

Things are different now. I don’t physically pad our family checking account. It’s just always padded because we are savers by nature. However, I found this practice to be extremely helpful during a time in my life when money was tight.

Always Put It Back

If an emergency arises and you have to use some of your padding, you must commit to put the money back. This money should not be viewed as a savings account that you can withdrawal from when needed. This money is cushion that should be forgotten about.  

So, get started! You will be glad you did.

Happy Saving!