How Much Money Should You Keep in Your Checking Account?
When it comes to managing your finances, one common question often arises: how much money you should keep in your checking account? Many financial experts recommend keeping one to two months’ worth of living expenses in your checking account, but ultimately that amount will depend on your financial situation.
Determining how much money to keep in your checking account can be a tricky task, but there are several factors to consider that can help you decide.
Firstly, you should analyze your monthly budget. You can start by listing your monthly expenses, such as your rent, car payments, and other fixed expenses that are automatically deducted from your account. Using a monthly budget comes in handy since it can give you a clear picture of your income and expenses. This information is useful to determine how much you’ll need to keep in your account.
If you’re new to budgeting, consider following the 50/30/20 rule developed by Elizabeth Warren. The rule states that your after-tax income should be divided three ways: 50% to needs, 30% to wants and 20% to long-term savings.
Need help with your budget? Use CCCU’s budget calculator to get started.
Secondly, it’s important to budget for variable expenses. These expenses are difficult to plan for as the costs differ from one month to another, and they can be higher or lower depending on your consumption. Examples of variable expenses include groceries, clothing, utility bills and many more. When creating a budget, set an amount you’re comfortable spending on this category. This can help you stay on track and avoid overspending.
Lastly, take advantage of a high-yield checking account. When you find out what amount you need to keep in your checking account, it’s best to put your money in a high-yield checking account. This way you can put your money to work for you while keeping it accessible.
At CCCU, Bonus Checking accounts offer 5.12% APY on balances up to $25,000 (see our website for additional terms and conditions). This is the highest paying dividend checking account in both the Las Vegas local and national market. Additionally, the Bonus Checking account offers exclusive membership perks including identity theft monitoring, cellphone protection and additional benefits to their members!
Visit the CCCU checking account page to learn the full benefits or speak to a service team member at 702-228-2228.