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How Much Money Do You Keep in Your Checking Account?

Lifehacker logo Lifehacker 12/8/2017 Alicia Adamczyk

a close up of a card: Pixabay© Provided by Univision Interactive Media, Inc. Pixabay

My checking account typically holds the amount of money I have/will need to spend over the course of one month. But I don’t do this for any particular reason, mostly it’s because I’m a 25-year-old writer living in New York and I’m lucky I can save a bit and still pay all of my bills.

Some banks have a minimum monthly or daily balance to avoid a fee (though this usually can be avoided with a direct deposit payment), which may alter customers’ behavior. And of course, you want to have enough to avoid any overdraft fees.

Tom Gilmour, a financial planner, writes that a month’s worth of expenses is the gold standard to give you a bit of a “cash cushion.” Someone in the office mentioned having a friend who claims to always keep $10,000 (??) in their checking at all times (I don’t know about you, but I don’t spend $10,000 each month). Which seems like a missed opportunity to earn interest somewhere, but I guess if it gives you peace of mind that’s important. Other people keep their balances purposefully low so they’re less likely to spend.

Assuming you’re in a position where you can choose how much to keep in your checking, any theories on how much is the right amount?

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