Now that my bank allows you to cancel overdraft “protection”, I logged in and did so recently. Having a debit card declined is vastly preferred to overdraft charges for me, but I would just rather not run out of money in the first place. It’s been years since it’s happened, but I decided to build a safety net into my checking account in Quicken. I went up to the first of the year and put a $300 unreconciled charge in. The net effect is it looks like I have $300 less than I actually have. (I ignore bank/ATM balances, as they almost always don’t take into effect charges that haven’t hit the bank yet. Always use your financial planning software or checkbook as a reference point for how much usable money you have.)

However, the little accountant in the back of my head was waving his finger back and forth, as while this is a great idea from a personal financial perspective, leaving a virtual placeholder charge not balanced with anything else isn’t very good accounting. So instead, I looked to my “Stored Credit” account in Quicken. It’s used for tracking gift cards and whatnot, and is treated as an asset account, not a cash account (since you can’t use gift cards to pay off debts). So what I did is made the $300 a transfer from Checking to Stored Credit. It’ll still remain unreconciled, but now the $300 is still counted toward my net worth.

I haven’t done so, but you could take it further and set up a scheduled transaction to “transfer” $25 per month from Checking to Stored Credit. That’ll nab you $300 per year in safety net money. At the end of the year, simply roll it up into one transaction (since we’re talking about virtual transactions here), and you’ll have an even stronger safety net.