Here’s How Much Money Should Be In Your Checking Account Every Month

How Much Money Should Be In Your Checking Account

There’s no better feeling than opening up a banking app every day and admiring a checking account flush with cash. If there’s enough money to cover all the monthly bills plus plenty left over for daily indulgences like coffee, lunch, or other incidentals, you’re likely feeling pretty good about your finances.

But is keeping too much money in a checking account – instead of a savings account – a bad idea? Keeping too much cash on hand when you don’t really need it might be a waste, especially if that money can be invested elsewhere. Also, having too much money on hand might make a person a little more careless with spending money.

So how much money should be in your checking account?

The purpose of a checking account is to act as your primary daily spending account. The account is used to pay off recurring bills and make daily purchases. With this purpose in mind, a checking account should contain – at the very least – enough money to cover all of your monthly expenses.

First, if you’re wondering how the dollar amount in your checking account stacks up against other people, here’s a good indicator from Nerd Wallet. According to a 2019 survey conducted by The Harris Poll on behalf of NerdWallet, the website concluded that Americans’ average checking account balance is about $2,900, with a median of $1,250. This fluctuates based on pay cycles and the number of times a person is paid every month plus the dates bills are due.

With the ballpark number out of the way, here’s what some experts had to say about the matter.

Business Insider asked this question of a financial planner who stated that a checking account should contain “no more than about two months of expenses” and offers signs that you’ve got too much money in your checking account. Credit Karma suggests that having anything more than that amount is too much.

Mint suggests going over your monthly bills to settle on a number but adding additional funds because some charges fluctuate like gas, electric, and other utility bills.

So where should you put the extra money?

The obvious answer to this question is a savings account, but that brings up the question, “well, how do I know if there’s too much in my savings and not enough money invested?”

We’re glad you asked.

LifeHacker explains that most financial experts would suggest setting aside an emergency fund of three to six months worth of your expenses to be on the safe side. Any additional money should be invested or put into a separate savings account earmarked for a major purchase like a home or new car.

For tips on the best places to put the extra cash, check out our investing section.

Chris Illuminati

Chris Illuminati is the author of five books and has written about personal finance, wealth, debt management, and entrepreneurship for numerous outlets including Wise Bread, Grow or Die, and Bankrate.