I tend to keep about $1000 extra in my checking account (plus any amount I know will need to be deducted before my next paycheck)... not for any particular logical reason, just out of habit. It's essentially a great big security blanket. I have actually never bounced a check, so I have no good explanation for why I feel like I need so much in my checking account. Most of my daily expenses go on my credit card, which means I have plenty of time to make sure I can pay it off at the end of the month. And it's not like it'd be hard to get at the money in my money market account if I needed it. So why do I feel like I need to keep so much in checking?
On the other hand, even if I shifted that whole $1000 over to my money market account, it'd only get me, what, an extra $40 a year? If (more realistically) I cut the amount in half, that'd be earning $20 more a year, less than $2 a month. Isn't $2 a month worth it for peace of mind? Then again, I've done plenty of sillier things to save $2 or $20.
What do you think? How much extra do you keep in your checking account, and why? We could even do a meme about this if people are interested... feel free to answer in the comments, or make your own post and I'll link to it.
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9 comments:
I use quicken to forecast exactly how much money I need in my checking account. Credit card bills, rent, utilities, pay checks are all entered, such that I know what the lowest balance will be. I then transfer the extra money into my savings account.
I try to keep a minimum of $100 in my checking. When I next get paid whatever I have left over $100 gets paid onto my debt but I try to budget to the penney.
Like JustAnotherBlogger said, I let Quicken tell me how much money I need to keep in my checking. I keep that much in there, plus ~$100 or so, and check on it weekly.
Minimums Always! We get paid once a month and I pay down debt with all available money after the monthly bills. Then I use credit all month and start all over again next month.
This way I am saving interest on the money I pay early, don't pay interest on the cc charges I pay off with monthly bills and keep moving slowly in the right direction to be debt free.
Not for everyone though, I have no emergency fund - sadly I have tons of credit if an emergency happened. The interest I save is way over what I would receive.
I keep 2-3 months expenses in the checking account (which earns a tiny amount of interest).
I keep 12 months expenses in a MM.
I know it is not rational to keep that much money in the checking (it is rational for me to keep 14-15 mo's expenses on hand due to my situation), but it gives me comfort to know that is somehow, against all odds, the value of my MM shares drop to worthless, I still have 2-3 months saved in the gov't insured account.
I trade the interest for the peace of mind that the double-emergency back-up gov't insurance plan provides.
I HATE having money in my checking, I try to never have more than $200 in there. To me money in my checking is money that could be sitting in my savings and earning interest!! When money is sitting in my checking because it hasn't gone through to a savings or credit card payment it drives me crazy.
I really feel insane now. I keep $1000 extra, sometimes a bit more or less and am agressively paying off about $2,500 in credit card debt. Perhaps I should just take the extra and pay the cc off or at least stick it in savings...why do I feel I need such a huge cushion. I get so freaked out otherwise.
i normaly have at least 12-15000 in my savings but i also have about 35000 in my checking
I too have wondered about how much to leave in a checking account for years. My household expenses total to $1,700 per month- thats house payment, insurance, the works! But i have been so ''comfortable'' having $3500 -$4500 in that account every month for years--for what reason i do not know?(comfort i guess?) I have a money market savings account that pays me about 3-1/2% interest so after reading some of the posts here , i think i would be wise to move about $1000 of that from a checking account (which pays almost nothing yearly) to that money market fund! I have 3 years worth of savings in that account so i am in great shape in that department -- just sounds to me like $2700 in my checking acct. should be a good running balance ? That would give me an x-tra $1000 for emergency funds-- what do you think?? --frank
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