How Much Money to Keep in Your Checking Account vs. Savings Account (2024)

FAQs

How Much Money to Keep in Your Checking Account vs. Savings Account? ›

Savings Account. Aim for about one to two months' worth of living expenses in checking, plus a 30% buffer, and another three to six months' worth in savings. Alice Holbrook edits homebuying content at NerdWallet.

For example, if you have two months' worth of expenses in your checking account and your emergency fund goal is to have six months, aim to save four months' worth of expenses in your savings account. Generally, you'll want to aim to have at least two to four months' worth of expenses in your savings account.

A common rule of thumb for how much to keep in checking is one to two months' worth of expenses. If your monthly expenses are $4,000, for instance, you'd want to keep $8,000 in checking. Keeping one to two months' of expenses in checking can help you to stay ahead of monthly bills.

The standard recommendation is to have enough to cover three to six months' worth of basic expenses. As a goal, that number can be steep. In reality, you can benefit from saving any amount.

Reserve 20% of your income for savings, including contributing to retirement funds and building an emergency fund. This ensures you are prepared for unexpected expenses and can work towards your long-term financial goals.

Unless your bank requires a minimum balance, you don't need to worry about certain thresholds. On the other hand, if you are prone to overdraft fees, then add a little cushion for yourself. Even with a cushion, Cole recommends keeping no more than two months of living expenses in your checking account.

FDIC and NCUA insurance limits

This insurance protects your money if the financial institution you bank with goes out of business or otherwise can't afford to let you withdraw your money. So, regardless of any other factors, you generally shouldn't keep more than $250,000 in any insured deposit account.

The median savings account balance for all families in the U.S. was $8,000 in 2022. Generally, higher-income earners and older individuals save more than younger ones. Some experts suggest three to six months' living expenses as a goal.

In the traditional sense, checking and savings accounts are both incredibly safe places to keep your money. The National Credit Union Administration (NCUA) automatically guarantees accounts up to $250,000 for each member of a federally insured credit union.

If you're 30 and wondering how much you should have saved, experts say this is the age where you should have the equivalent of one year's worth of your salary in the bank. So if you're making $50,000, that's the amount of money you should have saved by 30.

How much does the average person keep in savings? ›

The average American has $65,100 in savings — excluding retirement assets — according to Northwestern Mutual's 2023 Planning & Progress Study. That's a 5% increase over the $62,000 reported in 2022.

Having $20,000 in a savings account is a good starting point if you want to create a sizable emergency fund. When the occasional rainy day comes along, you'll be financially prepared for it. Of course, $20,000 may only go so far if you find yourself in an extreme situation.

How much do Americans have in savings? Overall, Americans have a median of $5,300 and an average of $41,800 in savings, according to the Federal Reserve.

American households, on average, have $41,600 in savings, according to data last collected by the Federal Reserve in 2019. The median balance for American households is $5,300, according to the same data. The reality is that the above stats may not accurately reflect the financial situation of many Americans.

The seven percent savings rule provides a simple yet powerful guideline—save seven percent of your gross income before any taxes or other deductions come out of your paycheck. Saving at this level can help you make continuous progress towards your financial goals through the inevitable ups and downs of life.

First things first: There's nothing wrong with keeping $10,000 in a savings account. If you're working with a reputable bank, your money will have Federal Deposit Insurance Corporation (FDIC) insurance up to $250,000 per person per account ($500,000 for joint accounts). This protects your money even if the bank fails.

If your debit card is stolen and you keep a large amount of money in your checking account, a thief can drain your account before you might even realize the money is gone. Keeping enough to cover your expenses—but not too much to put your money at risk—is a good balance to maintain to keep your money safe.

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.

Really, there's no hard and fast rule about how many checking accounts any one person should have. The number and type of accounts that works for you will depend on many factors, including your financial goals, spending habits, and comfort level with monitoring and managing multiple accounts.