How much money should I keep in my checking account?

The amount of money that you should keep in your checking account varies greatly from person to person and is based on your unique financial situation. Not having enough money in your checking account to cover expenses could lead to the account being overdrawn which can lead to overdraft fees; but having too much money in a checking account can mean that you are missing out on the interest that a savings account would provide.

As a general rule of thumb, try to have enough money in your checking account to cover two months worth of expenses including bills, food, and any miscellaneous costs and have the rest of your money in a savings account. Savings accounts are a great option since they provide you with a way to earn interest on your funds while still having those funds available without incurring a penalty for early withdrawal as is often the case with a share certificate or money market account.

The best way to determine how much money should be kept in your checking account is to create a budget. By creating a budget you can track how much money is coming into your accounts and how much money is leaving them. Once you have these numbers you can work on maintaining a checking account balance that is enough to cover two months worth of expenses.

Using your checking accounts wisely is an important part of maintaining your financial health and proper allocation of money between your checking and savings accounts can help you earn money in the form of interest payments.


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