How Much Money to Keep in Your Checking Account vs. Savings Account (2024)

FAQs

How Much Money to Keep in Your Checking Account vs. Savings Account? ›

Savings Account. Aim for about one to two months' worth of living expenses in checking, plus a 30% buffer, and another three to six months' worth in savings. Alice Holbrook edits homebuying content at NerdWallet.

Maintaining higher balances in checking can put you at a disadvantage if you're not earning any interest on your money. If you have more than two months' of expenses in a basic checking account, you might consider shifting some of that over to savings.

The general rule of thumb is to try to have one or two months' of living expenses in it at all times. Some experts recommend adding 30 percent to this number as an extra cushion.

The standard recommendation is to have enough to cover three to six months' worth of basic expenses. As a goal, that number can be steep. In reality, you can benefit from saving any amount.

After allocating one to two months of your expenses into a checking account, Anderson says that the two to four months of additional reserves should be put into a savings account — specifically a high-yield savings account.

The 50/30/20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should be split between savings and debt repayment (20%) and everything else that you might want (30%).

In the traditional sense, checking and savings accounts are both incredibly safe places to keep your money. The National Credit Union Administration (NCUA) automatically guarantees accounts up to $250,000 for each member of a federally insured credit union.

So, regardless of any other factors, you generally shouldn't keep more than $250,000 in any insured deposit account.

Millionaires Can Be Erratic With Their Checking Accounts

“Millionaires' checking accounts are all over the place,” Thompson said. “Some clients will only keep enough to pay for immediate expenses (e.g., $10,000) and others will have $150,000 in checking on any given day.”

How much balance should I keep in savings account? ›

Generally, you'll want to aim to have at least two to four months' worth of expenses in your savings account.

While reaching the $100,000 mark is an admirable achievement, it shouldn't be seen as an end game. Even a six-figure bank account likely won't go far enough in retirement, which could last as long as 30 years.

There's nothing wrong with keeping $10,000 in a savings account. But it might not earn you the highest yields. CDs and brokerage accounts could be better homes for your cash in some situations.

As a rule of thumb, you should aim to keep one or two months' worth of living expenses in your checking account. This amount will be enough for many people to cover recurring bills and smaller purchases before their next paycheck while leaving some extra cushioning to avoid overdrafting with unplanned withdrawals.

How Much Cash to Keep in Your Checking vs. Savings Account. Aim for about one to two months' worth of living expenses in checking, plus a 30% buffer, and another three to six months' worth in savings.

The government has no regulations on the amount of money you can legally keep in your house or even the amount of money you can legally own overall. Just, the problem with keeping so much money in one place (likely in the form of cash) — it's very vulnerable to being lost.

The higher the rate and the more money in your account, the more interest you earn. Therefore if you want to grow your money, savings accounts are an obvious choice.

If you're planning to use these funds for regular, monthly expenses like rent or mortgage payments, utility bills, or student loan payments, you'll probably want to put your direct deposit into a checking account. That way, you can easily pay your bills and have access to your money as needed.

There's no rule on the exact amount to have in your high-yield savings account. The amount of money you should store in these accounts depends on various factors. However, the general rule of thumb is that you should have liquid access to enough cash to cover between three and six months of your expenses.

How Much Should You Keep in Your Checking Account? Experts often recommend stashing enough cash to cover one or two months of living expenses, plus an additional 30% to cushion your account. Ideally, this strategy covers all of your transactions plus extra money for unexpected expenses or income fluctuations.