Our Two Cents

Every swipe of a debit card, every bill you pay and every check you write takes money out of your checking account. But what’s the correct amount of money to keep in there?

What’s your magic number?

It’s best to have one to two months of living expenses in your checking account at all times. Some experts suggest adding 30% to that number for an additional cushion.

Why keep that much money in your checking account?

Here are three reasons you want to keep your checking account well-padded at all times:

1. Avoid overdrafts. Even high-income earners can miscalculate their spending and end up with an overdrawn account. Why risk being charged overdraft fees when you can easily avoid them?

2. Provide a cushion for pre-authorization holds. Some merchants place a pre-authorization hold on your debit card until the transaction posts. These holds can reduce your available checking account balance significantly. Keeping your account well funded allows you to accommodate holds without fearing a negative balance.

3. Keep liquid funds available. A robust checking account means access to cash is always just an ATM transaction away.

Am I keeping too much money in my checking account?

But an overstuffed checking account may mean you’re missing out on higher returns you can earn if you were to keep those same funds in a Chief Financial money market account or share certificate. Contact us and we'll figure out the best option for you 

If you dare

Now that your checking account numbers are worked out, you may want to consider an unconventional way of making money management simpler: Open two separate checking accounts.

Here’s how it works. You’ll open a second checking account, and when your paycheck clears, transfer the funds you need to pay your bills into your second account. With two accounts, you’ll be able to tell exactly how much spending money you have left each month without doing mathematical gymnastics.