Final answer:
To prevent overdraft issues, Sam can set up automatic bill payments, create a budget, establish an emergency fund, and have her paycheck directly deposited. These steps, in addition to balancing her checkbook regularly, will help her manage her finances effectively.
Step-by-step explanation:
To alleviate the issue of overdrafts that Sam is experiencing, there are a few strategies that can be implemented. Firstly, setting up automatic bill payments is a prudent way to ensure that bills are paid on time. This can prevent the fees associated with late payments and the risks of checks bouncing. Secondly, it's important for Sam to create a budget to effectively manage expenses. A budget helps prioritize spending and ensures that bills can be paid when they are due. Thirdly, establishing an emergency fund is crucial for covering unexpected expenses without resorting to overdrafts. A minimum of three to six months' worth of expenses is recommended for such a fund. Lastly, having her employer utilize direct deposit for her paycheck ensures that the funds are available in her account as soon as possible.
Balancing your checkbook is also an essential task for managing personal finances. It helps track cash flow and prevent overdraft fees from insufficient funds. Regularly updating a checkbook can make the process much smoother. Moreover, understanding the function of checking and savings accounts, the importance of keeping a minimum balance for earning interest, and the usefulness of these accounts for easy access to funds can further aid in financial stability.
In addition, Sam should be mindful of her financial habits, such as paying all bills on time and not over-utilizing available credit.