How Much Should You Keep in Your Checking vs. Savings Account? (2024)

FAQs

How Much Should You Keep in Your Checking vs. Savings Account? ›

How Much Should You Keep in Checking and Savings? Keep enough in your checking account to cover one or two months of living expenses plus an additional 30% cushion. For savings, save enough to build your emergency fund appropriately and meet your other savings goals.

If you're following the 50/30/20 rule for budgeting, you might keep 80% of your take-home pay in checking and allocate the remaining 20% to savings.

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 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.

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings.

Keeping too much of your money in savings could mean missing out on the chance to earn higher returns elsewhere. It's also important to keep FDIC limits in mind. Anything over $250,000 in savings may not be protected in the rare event that your bank fails.

“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.” Why do millionaires approach their checking accounts so differently and across the board?

The best type of account is the one that fits your current financial goals and needs. Checking accounts can help you handle all of your daily spending and recurring bills, while savings accounts can help you build your savings, protect you from unexpected expenses and help meet your savings goals.

While you want to make sure you keep enough money in your checking account to cover your expenses, you don't want to keep too much in it, either. One reason is that it isn't going to earn you much interest. The national average for interest-bearing checking accounts is 0.07% APY.

How much balance should I keep in savings account? ›

If you don't have an emergency fund, you should probably build one even before putting your savings money toward retirement or other goals. Aim to build the fund to three months of expenses, then split your savings between a savings account and investments until you have six to eight months' worth tucked away.

Do you already have a healthy savings pot, or is this the start of something? £10k is a healthy sum, which could make a difference in numerous ways. Here we look at your options to invest your 10k and how best to make that money work for you — now and for the future.

Depositing $20,000 in a savings account is wise when you have a plan for the money, such as a near-term expense or rainy day fund. For long-term goals, like retirement, you might be better served by opening a brokerage account or certificate of deposit (CD).

All in all, depositing $20,000 in a savings account can be wise if you have a short-term plan for the money. Your deposit will be safe and you can generate decent amounts of interest in the meantime.

At least 20% of your income should go towards savings. Meanwhile, another 50% (maximum) should go toward necessities, while 30% goes toward discretionary items. This is called the 50/30/20 rule of thumb, and it provides a quick and easy way for you to budget your money.

Saving money from each paycheck can help prepare you for life's most expensive curveballs. Experts typically recommend setting aside around 20% of each paycheck for savings. However, the exact amount you save will vary based on your income, monthly expenses and personal goals.

Vanessa Potter, assistant vice president and branch manager at Addition Financial Credit Union, pegs the best interest rate for a savings account at 4.00% or more. "To find the best interest rates on savings accounts, you need to research and take your time during the process," she advises.