Final answer:
Maintain separate savings and checking accounts to manage finances, avoid dipping into savings unnecessarily, and keep within spending limits. Balancing your checkbook is essential to track cash flow and avoid overdraft fees.
Step-by-step explanation:
Keeping separate savings and checking accounts is crucial in managing personal finances effectively. Doing so prevents one from dipping into savings and helps maintain a financial cushion for emergencies, as advised by economists to have at least three to nine months' worth of income. Balancing your checkbook regularly is important to avoid overdrafts and understand your cash flow. A checking account is designed for daily transactions and may offer a debit card for easy access to funds, while a savings account typically accumulates interest and is meant for longer-term savings. It's important to recognize the differences and manage each account accordingly to ensure financial stability and meet spending limits.