Checking Account Balance: Here's How Much Money To Have At All Times

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Checking accounts are great. They give you easy access to your cash when the direct deposit hits and a place to store your money until the rent’s due. However, storing too much money in a checking account could also cause you to miss out on a little thing called interest.

When it comes to your checking account balance, knowing exactly how much to keep handy can be tough. You want to cover your bills, but also don’t want to risk any overdraft fees. If you’ve been struggling to find the perfect amount, keep reading.

Your checking account balance should be at least one and a half months’ worth of take-home pay.

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Every month, you pay a lot of bills. From rent and your phone bill to Netflix and Spotify, you need cash handy so you don’t miss the deadline. However, keeping only enough to cover your monthly expenses could put you at risk of over drafting. Every bill is due at a different time, so money is coming in and out of your account on a weekly basis. Plus, it’s important to account for those unexpected purchases, like birthday gifts, drinks with friends or those shoes that just went on sale for 75 percent off.

To cover it all, keep one and a half months’ worth of your take-home pay in your checking account at all times. So if you bring home $3,000 per month, aim to keep $4,500 in your checking account at all times so that you can cover your bills and any additional expenses that may pop up in between paychecks.

Some experts suggest keeping two months’ worth of take-home pay in your checking account, while others say more than one month is a little extra. So, having your checking account balance equal one and half months’ worth of take-home pay hits the mark right in the middle.

Keep using your credit card.

Consistently keeping your checking account balance at one and a half months’ worth of take-home pay may seem like a lot, but it’s really to help you cover your bills.

Pro Tip: If you haven’t set up automatic bill pay yet, consider doing it ASAP. It’ll help you meet every bills’ due date every month.

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What you shouldn’t be doing with your checking account balance is swiping that debit card or taking out cash that’s not in your budget. Using a debit card can make you vulnerable to theft. Whether someone sees your PIN or uses technology to steal your account number online or at an unauthorized ATM, you could end up losing the cash you have stored in your checking account.

Instead, pay with a credit card. Not only will your charges be protected, but you can also earn rewards or cash back for your purchases. Don’t get us wrong — your debit card charges are most likely also FDIC-insured up to a certain amount, but it could also take time for any money that was stolen from the account to be replaced. And you definitely don’t get anything in return for spending that money, and we all deserve a perks for our purchases. Just take some time to find the best credit card for your lifestyle.

Stash more in your savings account.

After you have your checking account balance equating to one and a half months’ worth of take-home pay, stash any extra cash in a high-interest savings account. Whether this is through your current bank or a different one like an online bank, it doesn’t matter. The money in a savings account will earn interest, which helps the balance grow over time. Your savings account is where the majority of your money should sit so that you can build up a nice emergency fund, while also saving for your future.

Now that you know how much money to keep in your checking account, continue paying down your debts and saving money for your future. You’ll be thriving in your personal finances in no time.

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