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How Much Money Should I Keep in My Checking Account? 

4 min read

how much money should I keep in my checking account

Written By

Brandi Marcene

When you create your checking account, you might plan on how much money you should keep for many reasons. Having a checking account is like having a savings place where you can put your money to buy groceries, pay bills, etc. It is important to have an account for almost all types of individuals. Not only does a checking account help you in saving your money, but it also helps manage many things, from not having too much money in your account to having as much money for things like emergency finds, paying monthly bills, covering monthly expenses, and so on.

Having a savings account is the initial move in your financial adventure. It's crucial to possess a savings account for many services and easy access to your money. Not only that, but also to keep your money secure, your savings account allows you to earn interest on your bank account savings. Nevertheless, it's usually advised not to keep all your money in your savings account but to invest it to increase your earnings.

Before deciding how much money you should keep in your account, it is important to know the minimum balance requirement.

The Minimum Balance Your Checking Account Requirement

The minimum balance requirement is different in traditional banks. A checking account usually requires a minimum balance to avoid monthly service charges. These balances can vary from $100 to $2,500, but most banks lean towards the lower end. If your bank has a high minimum balance requirement, it can be stressful to constantly worry about maintaining that amount. Instead, it would be wise to switch to an online checking account that has no fees and no minimum balance requirement.

Checking Account vs Your Saving Account?

Before deciding how much money you should keep in your checking account, let's look at understanding the checking account vs. the savings account. As you might be questioning,are chequing and savings accounts insured?


A checking account is specifically designed to hold the money that you plan to spend regularly. It's like your everyday spending account. On the other hand, savings accounts are meant for setting aside money for your short-term or long-term goals. They are like your piggy bank for the future. Both checking and savings accounts are important parts of your financial plan, but they serve different purposes.

It is recommended to keep one to two months' worth of expenses in your checking account. So, if your monthly expenses amount to $4,000, you should aim to have $8,000 in your checking account.

By keeping this amount in your checking account, you can stay on top of your monthly bills and avoid getting hit with overdraft fees. It acts as a safety net, ensuring that you have enough funds to cover your living expenses without unexpected expenses, a month's worth of expenses, interest rates, and any other trouble.


The amount of money to keep in savings can vary depending on the purpose of the account. Saving for emergencies usually requires three to six months' worth of expenses. For sinking funds, the amount saved depends on the specific goal.

Let's look at things that would answer your question: How much money should I keep in my checking account?

How Much Money Should You Keep in Your Checking Account

How much money you keep in your checking account is not determined. This depends on the type of account you have, such as an investment account, the type of financial institution, whether you have enough money in your bank account, how much your monthly spending is, the monthly maintenance fees, and much more. This will be further discussed as follows.

Emergency Funds

An emergency fund is created to save money that you can use to pay for unforeseen or sudden expenses. Some examples of financial emergencies are. Like unexpected veterinary bills due to your pet falling ill, you will have to pay for their fever fees. Also, losing your job or being laid off temporarily stops your weekly or monthly income. Falling ill and being unable to work for a while, or having a large medical bill after seeing a doctor. Like unexpected repairs for your car or home that you didn't anticipate needing.

If you're planning according to the advice from professionals about emergency savings, you should aim to save three to six months' worth of expenses. For instance, if your expenses are $4,000, you would need to have $12,000 to $24,000 saved up. Alternatively, you could save nine to 12 months' worth of expenses for a more substantial safety net in your checking account balance. On the other hand, if you're new to saving, you could start by creating a $1,000 mini emergency fund.

High Yield Savings Account

It's important to strike a balance when it comes to the amount of money you keep in your checking account. You don't want to have too little to cover your expenses, but you also don't want to have too much. One reason for this is that having excess money in your checking account won't earn you much interest. On average, interest-bearing checking accounts only offer a 0.07% APY. In comparison, high-yield savings accounts can earn as much as 5.00% APY or even more. So, if you keep too much money in your checking account, you'll miss out on the opportunity to earn a higher yield on your cash.

But having a high-interest savings account can help you in a lot of things, from earning high interest to benefiting from other perks.

Transfer Between Accounts:

If you have more than one checking or savings account, that can be in multiple banks. Then you might plan accordingly to the accounts the money you have decided to transfer to other bank accounts balances Like an account where there is a main account where monthly incomes come in and are transferred into different bank accounts, like an online account or a bank fails to account, a backup account is needed for transaction accounts. For everyday expenses, an account is needed for credit card purchases and other reasons. So transferring money between bank accounts is a great way of dealing with distributing your savings and the income you want or need to spend.

Track Of Your Spending

Track your daily expenses for a month to determine your monthly spending. Don't forget to include credit card charges and automatic deductions from your checking account, such as gym fees, monthly service charges, or loan payments. Use this total to plan how much money to keep in your checking account, to have dead money, to create a financial life, and much more. You can build your credit with KOHO, which can help you a lot, and also get a free credit score or a virtual credit card.

Maxim Amount

The amount of cash you can keep in the bank varies depending on the bank. Some banks have limits on the amount you can deposit. The FDIC insures deposits at member banks in case of a bank failure. Different types of accounts are covered, such as checking, savings, money market, CD, and prepaid cards.

The current FDIC coverage limit is $250,000 per depositor, per ownership category, and financial institution. This means that if you have accounts at multiple banks, each one is insured up to that limit. It's important to check the rules for protecting larger amounts, like trust accounts.

Overdraft Fee And Other Expenses:

Overdraft Fee and other expenses mean that it is wise to always keep a minimum amount of money in your checking account to avoid banking fees like through an online bank account. The more fees you avoid paying, the more money you get to keep.

Banks charge different fees for checking accounts, such as monthly maintenance fees and overdraft fees. By maintaining a minimum balance, you may be able to waive the maintenance fees. Having a cushion or buffer in your account also reduces the risk of incurring an overdraft fee.

Overdraft fees can accumulate quickly, with banks charging multiple fees per day. Considering that the average overdraft fee is around $30, it is a good idea to have at least one to two months' worth of expenses in your checking account at all times. You can get overdraft protection coverage and save yourself from overdraft fees.

Lose On Intrest

Often, you might miss out on earning interest. If you don't opt for an interest-paying checking account, you won't earn any extra money. However, savings accounts can help you earn interest by simply keeping your money in the bank. Online banks may provide better rates for savers than traditional banks or credit unions. Start building your savings account for you to reduce these issues.

Creating Budget

Just like everything else, determine how much money you should have in your checking account. You need to plan it through to understand where to put the money in. If you can't create a budget for where and how to spend the money, you cannot keep the amount you want at the end of the month, leading to financial crises. It is better to stick to your money budget as it can be time-consuming but also helps you a lot in predicting the future. And here is why that is the case.

Creating A Budget Using 50/30/20 Rule

The 50/30/20 rule for budgeting, popularised by Senator Elizabeth Warren, suggests dividing your monthly income into three categories. These included 50% for needs, 30% for wants, and 20% for savings. This rule simplifies budgeting by making it easy to decide how to allocate your income each month. If you follow this rule, you could keep 80% of your pay in check and save the remaining 20%.

This budget will help you understand how well to use your monthly income, where it is important to spend it, and where to keep it. This helps you find out how much money needs to be kept in your checking account.


It is important to know how much you should keep in your checking account because too much can lead to a lot of issues like high maintenance fees, high-yield savings accounts being affected, low interest rates, and much more. Less can have you dealing with financial crises in times of need and other issues. Balancing the right amount, like creating a budget and using 50/30/20 rules, can help you understand spending the amount the right way.

Note: KOHO product information and/or features may have been updated since this blog post was published. Please refer to our KOHO Plans page for our most up to date account information!


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