Where’s your financial comfort level?

I must confess to a new habit: I collect discarded ATM receipts. It all started when I walked by the bank in the building next to Motley Fool Intergalactic Headquarters, and found one such receipt blowing in the wind. I was shocked by how little the person had in her/his bank account, and how much she/he paid to get what cash was available.

To see what I mean, check out the stats on seven receipts I've recently picked up:

WithdrawalATM FeeAccount Balance
$60.00$3.00$72.79
$40.00$0.00$709.02
$100.00$3.00$8,973.53
$400.00$0.00$431.31
$20.00$0.00$301.73
$20.00$0.00$54.92
$20.00$3.00$48.04

What comes to your mind when you look at those numbers? Here's what comes to my mind:

  • Some people have very small bank accounts. Only one of those accounts is substantial. Of course, this may not be the only bank accounts these people have. But if it is… well, these people are living on the financial edge. I suspect they have other accounts with much bigger balances: their credit card accounts.
  • Some people are willing to pay a lot to get their cash. Three of these people paid three bucks. In the case of the last person, that $3 ATM fee was 15% of the withdrawal and 4.5% of the entire bank balance.
  • Some people don't give a hoot about polluting. I don't dig through the garbage for these receipts; they all have been thrown on the ground. Some people take the time to rip them up and then throw them on the ground (even though there's a trash slot under the ATM). I have considered the possibility that the receipts I collect aren't indicative of banking customers in general but a self-selecting sample — specifically, people who have little regard for their community also have little regard for their own personal finances. Just a theory…

What's Your Ther-Money-Stat?

Here's another theory I have: We each have an internal level of financial stasis that involves having a certain amount of money in the bank, a certain level of debt, and a certain amount of each paycheck going to savings — an internal “ther-money-stat,” if you will. If we somehow find ourselves in a better situation than our regular level of financial comfortability, we turn up the spending. Perhaps it's due to a raise, or a bonus, or an unexpectedly large tax refund. But as historian C. Northcote Parkinson wrote, “Expenses rise to meet income.”

On the flip side, there's a level at which we freak out. Our financial condition drops below our internal ther-money-stat, and we swear off restaurants, movies, vacations, and anything but the necessities. (By the way, a difference in these internal levels is one of the biggest sources of conflict between couples.)

If I had just a few hundred dollars (or less) in the bank — as is the case for plenty of people, according to the ATM receipts I pick up — I would immediately cancel the cable and the cell phone, turn down the heat and layer up the sweaters, and likely get a second or third job. I would barely be able to sleep with that little in the bank.

Of course, I don't know the stories behind these receipts, but my guess is that these folks have a much lower ther-money-stat than I do. The question is, can it be changed? Can someone who is willing to pay $3 to withdraw $20 from a $71.04 bank account turn into someone who would not rest until there's three to six months' worth of living expenses in an emergency fund?

I think it's possible; you GRS readers have told us before what got you to become fiscally fit. But I bet it's not easy.

Season's Depletings

I suspect that many of us (myself included) tend to get a bit self-righteous when we see evidence of people making bad financial decisions. However, I can't help — especially at this time of year — to also feel sorry for these low-balance bank customers. There are plenty of people who are experiencing tough times due to no fault of their own. I can even conjure images of parents withdrawing from their measly accounts to buy gifts for their kids. (I'm a sucker for a holiday sob story.)

So whatever the reason for these folks' modest bank accounts, here's to hoping that they — and you — have an enjoyable holiday season, and that 2010 brings bigger bank balances to us all.

More about...Psychology, Budgeting

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hsettle
hsettle
10 years ago

That’s a lot of unexamined assumptions! If you picked up my ATM receipt, you would see something similar, but the real story is this: – Checking is always low, especially at the end of the month. I send everything that matters to savings, and make transfers when necessary. There’s no reason to keep $8000 sitting in a checking account in this day of electronic transfers and instant balance inquiries. – The checking account has overdraft protection via savings. This doesn’t cost me anything. – I pay the extortionate $3 ATM fee without blinking because it is refunded by my bank… Read more »

rzrshrp
rzrshrp
10 years ago

It’s hard to say from just one checking account. My account that I share with my wife is usually hovering around the 50-100 range. When we get our paychecks, we pay the bills, put money in our savings account, spend our fun money and hold on to a bit of cash in the checking account for gas and miscellaneous expenses. The majority of money is in our savings account as I think it should be. I’d rather have a higher cushion than $100 but to have almost $9,000 in what I’m guessing is a non or very low interest bearing… Read more »

Pedatu
Pedatu
10 years ago

J.D.,

One thing you may also want to consider is that some people (such as myself) keep a very low balance in their checking account. Many of us keep just enough to pay the bills; and transfer the rest to a higher yielding savings account such as eTrade or ING.

Merry Christmas and Happy Holidays!

John C. Kirk
John C. Kirk
10 years ago

I’ve never understood why people leave their receipts behind, or chuck them on the ground. When you withdraw cash (at least in England) the machine will ask you whether you want a receipt, so why would someone say “Yes” if they don’t actually want it?

rzrshrp
rzrshrp
10 years ago

@John ESI Money I don’t remember ATM machines in the US having that option but the simple answer is because people don’t care. I hate littering but I see it so often that I’ve gotten pretty jaded about the issue.

After seeing a person literally throw trash out their front door into the gutter in front of their house, I see that some people absolutely couldn’t care less about not living in an area surrounded by filth. And yes, trash trucks came to that area to pick up twice a week.

Leigh Ann
Leigh Ann
10 years ago

I agree with rzrshrp, it is tough to tell from one account. I get money out of my checking account as quickly as possible just so I won’t be tempted to spend it – every cent is budgeted so I know exactly what’s going where. That said, because I’m so obsessed with where every dollar is going, I normally wouldn’t withdraw cash ever. Everything’s carefully managed between automatic withdrawals, etc. For me, my ther-money-stat freakout alarm sounded when I realized that we only have about 1.5 months worth of expenses in the saving account – ACK!!! We don’t have any… Read more »

lostAnnfound
lostAnnfound
10 years ago

don’t these receipts have account numbers on them? I would be concerned some unscrupulous person would take that info and have some fun. That being said, it is rare that I withdraw money from an ATM. If I need, I’ll get cash back when I am grocery shopping or make some other type of purchase. If you saw the balance in my checking account you might think I was living on the financial edge, but like rzrshrp I don’t keep a lot of money in my checking account, maybe $100 a week for gas or incidentals and as a bit… Read more »

Mrs. Money
Mrs. Money
10 years ago

Oh gosh, the ATM! Cash gets me in so much trouble. If I have cash I spend it! When I use my card, I can track that, so it makes it more real. I just talked about this yesterday on my blog:

http://ultimatemoneyblog.com/its-the-small-things-too

Great post! I am going to check out your site now!

Writers Coin
Writers Coin
10 years ago

It’s kind of creepy but also fun that you’re collecting these. Almost like a sociological experiment.

As for the ther-money-stat question, mine is the pile of cash sitting in our ING account. Sure, it’s meant for a down payment, but with that pile sitting there I feel invincible.

If I got fired tomorrow it would suck, but I’d be fine.

Now, after we buy a place…that will change…

Doughboy
Doughboy
10 years ago

I agree. Different people can have vastly different comfort levels regarding extra cash in checking. However, checking account balances can be misleading. Personally, I have about eight dollars in checking at the moment. I also have almost ten thousand in savings and over 100-thousand in retirement accounts.

By the way, ATM fees are for suckers. 🙂

JoeTaxpayer
JoeTaxpayer
10 years ago

I wonder about concluding anything from this. Every pay check gets direct deposited into my checking, but quickly gets transferred out, so my ATM receipt if I used the ATM would show a small account balance. Also, many banks rebate the ATM fees charged to their customers from other banks’ machines, so some of those $3 fees are really zero.

Jennifer
Jennifer
10 years ago

I think the ther-money-stat theory holds some truth and is exactly the reason my husband and I choose to keep our checking account balance low, shoving whatever money we can over to savings. From week to week I keep only what we need for the next few weeks’ budgeted expenses plus a small cushion in checking. The balance rarely drops below $200 but also never exceeds $1200-$1500 (which may not seem substantial to some people but it is well in line with our income and expenses.) The savings account is linked to a checking account so that money can be… Read more »

Claude
Claude
10 years ago

I agree with others, you cannot really say how much money these people really have in the bank… At the start of the month I transfer all the budgeted money into their respective savings accounts and subaccounts, leaving not very much in the checking account (around 100euro or so) whenever I need the money I transfer it between checking and savings (I have free transfers between my accounts, as well as free ATM), and I’d rather have all my money in various savings accounts giving me interest than having it stay idle in the checking account… so if you’d find… Read more »

Adam
Adam
10 years ago

Less than $100 stands out to me. I don’t do much spending from my checking account, so I try not to keep too much in it, but I don’t like to have it below $500. You’d also see some ATM fees (not usually $3), but they are refunded to me at the end of every month.

Ms. Clear
Ms. Clear
10 years ago

We keep a $500 buffer in checking, in case of an error on our part or some other issue, but the revolving balance is usually over $1K, but this is usually because some check is uncleared. All the real money is in ING, a bank CD or our small retirement accounts.

I always go to the same ATM, which is where my bank is. Fees are for people who can’t plan out when they need cash.

Daedala
Daedala
10 years ago

I agree totally with the idea of a thermostat for money. One of the biggest things I have had to learn to do was to trick my thermostat into letting me save more. It’s not that I couldn’t save, or that I wanted to spend all that much, just that a really large emergency fund balance looked and felt so weird; I couldn’t sustain putting money aside. I had good retirement savings, but my emergency fund was stuck at $5k for a few years. So I stopped trying to save a large lump sum and built a yearlong monthly CD… Read more »

Peter
Peter
10 years ago

I always look at the abandoned receipts too. 🙂 They seem to fall into 2 groups. People who tried to withdrawl $100 (or some other relatively small amount) and didn’t have enough in the account, or people who withdrew some amount and have a balance of $10,000 or more. I assume the first group discards the receipts out of anger and the second out of indifference. I often wonder why someone would keep $10,000 in a checking account. Do you really need access to that much money on a regular basis? I usually try to keep a minimum of about… Read more »

Paul
Paul
10 years ago

One of the first things I did to dig myself out of debt (and a habit I continue to this day) was stopping paying ATM fees.

Not only did it save me 3-15% of all the cash I pulled out, it forced me to think about when I needed cash and better plan my spending. I couldn’t just leave the bar and walk across the street to an ATM, I had to plan beforehand how much cash to take, because the ATM there charges a fee.

These little changes in behaviors add up.

Scott
Scott
10 years ago

I agree with the other comments on here. J.D. does make the comment that we don’t know what other accounts they have, but we keep our checking account balance higher than one month’s rent. I figure if there is enough money to cover our largest monthly expense, almost all other incidentals should be less expensive. For real emergencies, there’s savings which has more than the checking account and earns a lot more interest. As far as ATM fees, we almost completely ignore them now because our bank refunds all of our ATM fees (include a $6 ATM fee we incurred… Read more »

Sam
Sam
10 years ago

Funny, I used to this in college. But our current ATM receipt wouldn’t look much better since our day to day accounts are kept pretty low, $1000 or less, more often $500 or less. But we have cash in other accounts, savings, other checking accounts not tied to our ATM cards and in our ING accounts.

My ATM receipt might also show a charge to access cash (although probably not since most times I hit my own back) but my bank refunds three ATM charges a month.

Minderbender
Minderbender
10 years ago

Although the responses here would indicate that many purposefully keep their checking acct totals low as a strategy to maximize interest earned or as a psychological move (keeping money out of sight, out of mind), I have little trouble believing that the receipts you have sampled indicate exactly what it looks like- people who are chronically living on the edge of bankruptcy and playing money roulette.

George
George
10 years ago

Most people just don’t think about managing their finances or how much they pay to withdraw money at an ATM. I think the solution is education. Anyone can achieve financial freedom if they learn how to manage their finances and increase their income. It doesn’t matter how smart they are. It doesn’t matter how much money they make. It doesn’t matter how much debt they have. That’s one reason I love this blog and similar financial blogs. People can begin to learn about finances, and how to make money (like from having a blog!). That can lead to books, CDs… Read more »

Peter
Peter
10 years ago

@Minderbender – I agree. Many of the receipts I find show the person is trying to withdraw $100 and it is denied because the account only had $70. Living that close to the edge AND not even knowing how close you are, is not a good combination.

Mike
Mike
10 years ago

My receipts will have a very low balance too since I place most of my money in online accounts. I only use my brick and mortar bank for deposits.

CB
CB
10 years ago

Scientifically, I agree you can’t tell anything from this experiment. However, I do find it fascinating. I find it interesting to observe behaviour of people I come in contact with throughout the day. I would guess that, even if it is a self-selecting sample, the results wouldn’t be accurate (for lack of a better term) than most statistics that are thrown around currently. Concerning my comfort level, I’m probably young enough to be used to being poor so the fact that there is less than $1000 in our checking account, while slightly worrysome, is not a freakout point yet. My… Read more »

Denisend
Denisend
10 years ago

Psh. I have a checking account just for my allowance and if you saw the balance thinking it was my everyday checking you’d be *stunned* (it’s currently about $10). It’s fun money, I’m allowed to spend it on frivolous stuff, and keeping it in a seperate account keeps me from over spending.

Plus, the bank refunds any ATM fees incurred on that account, so I don’t worry about them.

Amanda
Amanda
10 years ago

I like having my checking around 1k. It makes me feel better. Especially as I generally use my debit card for everything, so if I had an emergency happen to my car or some other emergency, I could probably just use my card. Anything bigger, and the situation would probably take a few days to work out and I’d have time to transfer funds. On getting the receipt – I like getting mine, but not keeping it. If I get the reciept, it confirms my account balance. Otherwise I end up having to go through the ATM menu completely twice:… Read more »

MommyMel
MommyMel
10 years ago

I don’t have any problems with the balance a person has but I do take a huge issue with ATM fees. I told my Mom that she paid quite a bit in ATM fees and she said she knew but was too lazy to go up to the bank. When the next bank statement came in, I added up the ATM fees and she was agog at the total. Needless to say, she now goes to the bank or does cash back at the register when grocery shopping. Personally, I hate the idea of paying to get my money. It’s… Read more »

tiff
tiff
10 years ago

That can be deceiving. If someone picked up my receipt they would think I had 20.00 to my name. I keep a very low balance in my checking account and transfer all other money to my higher yield online savings account…i also get my ATM fees refunded each month by my bank…so I’m really not paying anything to get my money… The older I get and the more entrenched I get in life, the larger amount of money I need to feel comfortable…20,000 is my new comfort level… i work as a nurse and emergencies happen…to everyone…i do not want… Read more »

KC
KC
10 years ago

I’m a bit surprised at those low numbers, too. When I was younger (20-30) my ATM receipts would have looked like that (but never below $100). When I bought my first home (27) I would have kept enough to cover my bills and outstanding checks plus one months mortgage – so you’d see close to a thousand dollars in my checking account. Today I still abide by the same requirements – however my house and mortgage payment are bigger now so you’d see more in my account (but not quite the $8000 the one person had). As for money market… Read more »

Ian
Ian
10 years ago

The comments are good, but I think most people are missing the point of the article. I think the ATM receipt approach is kind of a stretch for what is a good topic. I understand what Robert is saying. After receiving my paycheck, and accounting for bill transfer, 401 contributions, and other savings contributions, I aim to have $500 – $700 cash for 2 weeks of expenses (which is usually more than enough). However, if for some reason after all my transfers, I end up with, say, $900-$1000 in checking, I tend to think of some “want” that I can… Read more »

BigDave67
BigDave67
10 years ago

I think it is indicative of today’s society. We tend to overlook common sense for convenience. My DW will withdraw funds from the nearest ATM rather than travel a bit to make the withdrawal from our bank. Lectures about the fees incurred fall on deaf ears. The value of time trumps the value of money.

Eric
Eric
10 years ago

I think you make too many assumptions. My checking account is always low just before payday. When we get paid we pay the bills due before the next payday and everything else goes immediately into investments or savings with the exception of a ~$200 cushion.

As for the fees, you don’t really know what’s going on. Perhaps this person is primarily “cashless”, needed cash for a certain transaction, and there were no branches of his bank nearby.

Beth
Beth
10 years ago

This post spoke to me because I was one of those people. I figured if I have $10 left in the account, no worries. And yep, the $3 wouldn’t have slowed me down at all. I am thankful that I reset my thermostat!

Chett
Chett
10 years ago

There is something that is being over looked. If you’re reading the blog post on “Get Rich Slowly” you are probably concerned about saving, investing, and building wealth. If you have been following any of the advice on this site, or used common sense for that matter, you probably have a reasonably comfortable amount of money in your savings accounts that can be transferred to your checking account relatively quickly. But, I think the article is relatively accurate in capturing the spending and savings habits of the average American. Remember only in the last year has the savings rate of… Read more »

Mandi
Mandi
10 years ago

Count me among those who would have a low balance on the account from which I withdraw the cash – it’s just my slush fund, the only account where I take any sort of money from in the first place. My “real” money lives elsewhere. Furthermore, I don’t mind the ATM fees because I use a credit union that refunds them at the end of the month (Navy FCU.) So I think it is not clear, what someone’s situation is from leftover receipts. I do absolutely agree with you on the littering thing, though. Jerks!! I also would not be… Read more »

steven@hundredgoals.com
10 years ago

You would find the exact same thing if you were to find an ATM receipt of mine…though I don’t often withdraw cash, so good luck finding one! My financial comfort level is essentially zero dollars. I’ve been broke and homeless, so a low balance in my bank account doesn’t affect me like it would some. Not to mention, my expenses are almost nothing and being a student, I don’t expect to have a large bankroll. To me, there are worse things than a small bank account. Whenever I do get money, I use it to pay off my Student Loan… Read more »

Deborah
Deborah
10 years ago

I don’t think any conclusions can really be drawn for these receipts. My pay check is direct deposited and immediately either A) spent to pay off the last 2 weeks of purchases on my credit care, or B) transferred into various savings accounts. My balance, 24 hours after getting paid, is just over $100 and stays there til I get paid again.

ashok@shop78
10 years ago

I Used to do like operate 3 accounts & I have kept 1 for ecs and the other for paying bills,the last one as my personal

Ms. Clear
Ms. Clear
10 years ago

I remember when I was 19 and I would have $40 left on my overdraft protection ($250) and my little bookstore paycheck would get me barely into positive territory.

I’m sure some people really do have $20 left. People say things like that to me sometimes, that they’ve got X amount till payday. Some people are always cutting it close.

Adam
Adam
10 years ago

I always have about $2k in my checking account. Anything below that and I put the brakes on spending anything. Reading the other comments, that seems higher than most, but it’s a joint account and the $10 in interest each year that I’m not making is well worth it in piece of mind.

Conversely, when the balance creeps up, I always transfer it to a high-yield account. I guess that’s my ther-money-stat.

Dee
Dee
10 years ago

You mentioned not knowing the backstory to the owners of these accounts — here is one: I’m actually embarrassed to say that at 46 this is the first year that I have taken the effort to read personal finance blogs/books and have taken extreme steps to turn my finances around. The fact is that I left my parent’s blue-collar, lower-middle class home just before turning 18 and half-way through my senior year in high school. I lived a comfortable life but never learned money or practical skills. I used to joke that I never wanted to draw up a budget… Read more »

Kristen
Kristen
10 years ago

You would probably be suprised by my ATM receipts. I refuse to pay to get my money out however my balance is very low. That is because my checking account pays next to no interest. So I keep most of my money in the savings account and move it to the checking account as necessary. I only need 3 days to move from my high interest account and no time at all to move from my lower interest account (the true “emergency fund”). I am also an accountant by trade so at any given time I know exactly how much… Read more »

Sunandshine
Sunandshine
10 years ago

Haven’t read the previous posters, so please forgive me if what I say has already been said:) But, would like to point out that, my ATM receipt would be something similar. For- 1) I use debit card for day to day purchases, so I like to have only minimal amount in my ‘checking account’. So as to limit spending 2) After payday, I have automatic transfers to my savings and money market accounts at ING and to the money market account of a local credit union 3) My checking a/c is a bank account which I posesses since Grad school… Read more »

EscapeVelocity
EscapeVelocity
10 years ago

I have a pretty low balance by the end of the month, but I do NOT litter. Or pay fees, unless I’m traveling–I have a fee-free ATM within walking distance of my house.

As long as my checks will clear, I don’t worry about the balance in my checking account. My ther-money-stat setting is more about the combined balances in my checking, savings, and money market accounts. I can move money around between them instantly if I need to.

Ken
Ken
10 years ago

Once the emergency fund drops below $1000 I get a little concerned. It’s good to be prepared for problems and knowing I have something extra lets me rest a little easy.

Mark Wolfinger
Mark Wolfinger
10 years ago

“Can someone who is willing to pay $3 to withdraw $20 from a $71.04 bank account turn into someone who would not rest until there’s three to six months’ worth of living expenses in an emergency fund?”

Probability = zero.

When you have no conception of the value of money; whey you pay ‘whatever is asked’ for something, you just don’t get it.

Sadly, these people are poor, will always remain poor, and don’t know how to make things better for themselves.

Denise L
Denise L
10 years ago

The “ther-money-stat” concept is right-on and probably related to an inner debt pain tolerance.

HOWEVER, I agree with much of what my fellow readers have said up to this point. You’re making a lot of assumptions here about people’s balances on their receipts (though you do rightly point out that this is a self-selected group).

On top of everything else, we should be looking at the average balance, too, not just what happened at one point in time. This data should be available somewhere and would make a much better lead-in for the concepts you discuss.

Kevin M
Kevin M
10 years ago

Glad to know I’m not the only guy that looks inquisitively at the discarded ATM receipts.

We don’t keep much more than $1k in our local bank account, preferring to keep most at ING where we earn some interest. You’re right though, having under $100 would make me take action.

Jackie
Jackie
10 years ago

I think your right about the theory of people having a comfort level that the try to maintain. I’m used to having very little in my checking accout — sometimes even less than a dollar, although $20 is more common — because I immediately distribute my cash to savings, bills, and investments. I almost never spend cash. Right now I have about $800 in there and it’s bothering me that I haven’t had time to distribute it.

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