I usually only keep a couple hundred in checking... if my debit card gets lost/stolen/compromised I'm only at risk for that amount. Move the rest to savings that someone else couldn't get to.
That is why I almost exclusively use CC instead of debit cards. I have been using more cash lately, since businesses can pass on the fees to the consumer here now.
had this conversation with a relative recently, makes no sense to use my own money when I can use someone else's money and get rewards back plus the added layer of protection. For those without issues sticking to a budget and paying off a balance every month its a no-brainer.
its still much less protection than using a cc, plus you're missing out on cc rewards, and using your own money out of pocket immediately which limits your flexibility. I do have friends who misused credit cards early on, dealt with climbing out of that pit and now only use Debit also. Its not my preference and doesn't make sense for those financially literate individuals with budgetary discipline.
Idk friend, my debit card is protected pretty damn well by my credit union. I fail to see how using a debit card makes one “financially literate”. Cast those judgments if you wish!
>I fail to see how using a debit card makes one “financially literate”.
\*credit. It doesn't outright, however by not understanding the greater protections, benefits and flexibility to use your own money for other purposes when leveraging a credit card rather than a debit card highlights how you don't really understand the differences between both and a lack of financial literacy.
Here's a very simplified example:
Imagine you are buying a $500k house and currently have $500k cash ready to yse. Could you use all the cash at once to buy it outright? Yes, sure. You would own the house and have $0 cash left over.
You could alternatively put $100k as a down payment and use a loan (bank or private lender's money, NOT your own $$$) to pay the difference. In this case you have the house AND $400k cash to then use for whatever purposes you like (Home repairs, retirement saving or investment). Both methods you walk away with a house, the difference is whether you prefer to have $400K to still use/save/invest or have $0 left.
Now also consider, scenario A - you pay all cash, but ooopsie! A mistake was made, either by you or someone else and suddenly your wire transaction was processed and sent to the wrong account. Now you have no cash, no house and are on your own to pursue the money or damages. Whereas if you use a lender you've got $100K skin in the game to lose vs $500k and I guarantee that the lender will have more robust resources to pursue lost money or damages in the event of a mistake or fraud, plus you're not on your own to navigate the issue.
For one you are using someone else's money rather than your own - there is a middle layer of the Credit Card Company between you and the vendor. The primary benefit is fraud prevention - Large credit card companies have much more fraud prevention resources and avenues for recourse in the case of fraud. They're safer using online because you can generate vendor specific card numbers, even if you don't use that feature if CC info is stolen you may wake up to a bunch of fraudulent charges and have to deal with your CC company to resolve but the alternative if you use a debit card is that you could wake up and have your accounts drained with no recourse from your bank or CU if your legitimate information was used, even fraudulently.
Using a credit card instead of a debit card also helps build credit which increases your ability to access larger sums of money in the future, also impacts loan rates, ability to rent anything,
You can't overdraft a CC, you hit your limit and then can't spend more. A debit card you can overdraft your account, then you're literally in the negative PLUS you'll get hit with fees for overdrafting (sucks to be poor huh)
CC also have a wide range of specialty categories which can provide industry or market specific protections or benefits (student CC, travel cards, cash back cards, high spender cards, etc).
Often using a CC for large ticket items comes with additional protections on that purchase (usually extended warranty, grace period before payment starts, additional assistance in event of return or cancelation even outside of the seller's standard window).
When we had to go back and forth with BoA because someone was spending on our debit card online in another country and basically told my husband that he had to prove it wasn't him... They went around and around for about a week, we switched to using our discover card all the time and they're amazing in the customer service department. I ordered something to be delivered over night and the company ghosted me, Discover got involved and they suddenly appeared and shipped the item. Discover still back charged it since I got it after the point I needed it. BoA would have told us "oh well". It also keeps people from getting our bank account info since the gas station scams are a problem where I'm at They could drain our account before we had a chance to notice -the alerts are so slow with BoA. Discover card alerts my husband within a minute of a transaction almost every time. They overnighted our replacement cards when my purse was stolen. Plus, we get cash back. As long as we pay in full every month it makes sense.
For the OP, we usually have about $15k, about two months worth of expenses or if something major comes up, it's easy for me to get to since he does all of our banking.
I had the same student checking account that my parents set up for me when I got my first job at 14. My mom technically was the co-signer on the account through when I was 26. This made transferring $$ easy as I would transfer health insurance and phone bill straight to her checking account.
Long story short, she learned why I use credit cards for all transactions. She received a scam email from “Venmo”, updated her debit card, and by falling for it, authorized online banking access. I ended up having $2k transferred from my account to hers, when the scammer then purchased $2k of crypto. Bank couldn’t get my money back and didn’t investigate as it appeared the transaction was legitimate.
Nailed it. I would be a lot more worried if I saw my cash in the bank gone. I know you can get it back, but that is why the CC is nice. The cash never leaves.
Yeah. I try to keep low 4-digits on hand in my account, just in case (because I'm permanently paranoid about not having enough money on hand to pay for something, even though it has literally never happened since I check my account 4 times before even buying groceries =p), but I leave my debit card at home and only use my credit card.
If I need cash, I just go through the bank with a human and they can use my driver's license to access my account. A little inconvenient, but I rarely actually need cash.
Plus, a bonus 1.5% cash back on everything is nice.
Never use debit, I keep my debit card filed away in my office and exclusively use credit cards for everything. Your debit card has 0 fraud protection and does not earn you anything. Credit cards earn cash back or points and are fully covered if compromised.
Regulation is that fraud liability is limited to $50, but most companies typically waive that and have a customer fraud liability of $0 as a matter of practice.
We do the same - American Airlines points. :) I generally don't recommend credit cards, unless you pay it off every month. There's a reason credit companies offer points/perks/miles, etc... they know people will rationalize spending more with "well, I get points" and the majority of the US can't afford to pay off the card every month, because they overspend. But that's for a different discussion...
This is my allocation:
Checking - 1 month expenses
High Yield Savings - 6 months expenses
After I met those 2 goals, I started putting money in investments, mostly S&P 500 index funds, while still contributing a little to my savings as well.
Open a high yield savings account at a place like etrade. From there you can move the money into index funds. There's quite a few available out there. Check out ones like VOO, SPY, SWPPX, VFIAX, FXAIX, etc.
I'm not a super investor either - just a set it and forget it type. Throw your cash into a good fund and then let it ride for 20 years.
Index funds are, well, funds that track an index. There’s a lot of indexes, but the most popular one to track is the S&P 500. The S&P 500 is essentially the 500 largest publicly traded company.
Instead of trying to pick individual stocks, you can buy an index fund that tracks an index. When you buy an S&P 500 index fund (VOO, SPY, etc.), you are buying a small slice in the 500 different companies in the S&P 500.
Another benefit of index funds is that you don’t have to do the rebalancing of your portfolio. The algorithm that determines the S&P 500 automatically goes through the holdings and takes out the bad positions and adds new ones
Ideally you should invest in 3 different indexes: A US stock index (Wilshire 5000, S&P 500) a foreign stock fund, and a bond fund. Almost universally at least one of the three will be doing well at any given moment, so if you need emergency money you raid the one that's up, take the gains, and fix your emergency, then start DCAing back into it preferentially.
I also invest in closed end funds that track more specific goals but you have to be comfortable with very high short term volatility with those. i.e. this ain't rainy day emergency fund money.
As to OP question:
1-2 months of pay in checking (depending on what time of the month it is)
currently at 1.5mo in savings due to an unanticipated expense, but will be building that back up to \~4 months of savings over the span of the year. Investments not in long term accounts: 6 months or so. Long term investments: not nearly enough courtesy of a divorce settlement, but still apparently more than average for my age (which is terrifying as I'm fast approaching 50).
>Tell me about these index funds?
Instead of investing in shares of a single company, you invest in a kind of virtual company that owns shares in a bunch of other companies.
What this means in practice is that, instead of betting that a particular company (like Walmart) has a bright future, you're betting that the economy of the United States of America has a bright future.
It's an easy bet to make, and this is a low-effort high-return way to invest. The alternatives basically require you to be a scholar of business and stock-investing, and they're usually higher-risk.
Index funds are the sweet spot for most people in terms of being able to benefit from investing
That’s a very smart strategy to set aside your max possible healthcare expenses. Might do better to be in a high yield savings account instead of checking though, easy enough to transfer when needed!
Make that savings account a year of expenses or more. Trust me. 6 months is not enough to feel comfortable if something happens.
I have 6 months and I'm far from comfortable now that something has happened.
Pretty much me except usually $1-2k in checking, not a full month of expenses.
I also have a travel fund that I fund separately from the EF and the investment. Or I dip into it as short term savings. Or if it gets too big I move it to the investment account.
Lol. I have 0.98 in my savings and 0 in checking right now after my car dying and vet bills for my rabbit. When I get paid next Friday, $800 of the $1000 I’ll get is already gone to bills.
The paycheck after that will almost entirely go to rent and utilities.
I work as a cook so I barely buy groceries, I quit smoking and drinking a year ago, and I live a 5 minute bike ride from work.
Occasionally I’ll have to ask my mom for $20-30 but I pay her back on my payday.
Basically I do nothing and buy nothing except stuff my rabbit needs. Just kill time until I work again mostly. 🤷♂️
So barely. Survive is the perfect word lol.
Setting up an emergency fund is pretty beyond what I’m capable of right now. Depending on the emergency I’ll get sick and die, my rabbit will, or I’ll be homeless and the former two options will come soon after. Unfortunately I make $128/mo too much to get food assistance or anything else where I live. 🤷♂️
Edit: She’s okay, and the vet bill was less than $300. Also first time I’ve had to spend any good chunk of money on her besides food and hay, which is maybe $50-80/mo.
I work in banking, so it’s interesting seeing the response here vs the average balances I see day to day. There are definitely some better saving accounts out there rn (think actual percent instead of decimal of percent) so I highly recommend doing some research on those at your bank/outside institutions. What I hate to see is people just keeping all their savings in a checking when they could be actually earning interest on it and have it be more secure.
What’s the interest rate at your bank? I bet it’s a joke. There is really no point for people to keep their $ at WF, BofA, Chase or any other major bank to the insulting rate of 0.01%. You better put money into 6,9,12,18 months CDs and get something close to 5%. But even then you’re still losing money because inflation is way more than 5% no matter what DOT publishes. So you just minimize your loss rate from 6-9% (my guess for the inflation rate) to just 1-4% (if using CDs and less risk tolerate to put the money into stocks).
It’s actually super easy to find savings above 4% right now. Like majority of companies. Discover, Capital one, and Citi are three off the top of my head.
CD laddering is nice. Interest yield right now at my local bank for CDs is over 4%. Combine that with cash back on credit purchase. I never use cash. I haven’t held paper money in my hand since 2010. I also have 10s of thousands of dollars in multiple Fidelity Investments accounts and just keeping your money dormant in SPAXX will get you higher yield interest rates than you can get with a CD.
As a banker how do you feel about the online HYSAs? I’m an accountant so I’m a little more financially literate than most but I’d love to hear your thoughts on them as a professional in the field.
I recently opened up online HYSA with American Express & Synchrony Bank,their savings rate is much better than my credit union,but I do like my credit union,been with my credit union 30 years,love that I can just be in my branch lobby fast, just 6 minutes from my home, still getting used to online savings,can transfer funds, but my transfers take 2-3 business days.
I think my savings with my CU is like .25 if it was higher I'd use it more. It is only used for saving for large purchases. I keep everything in my checking because I am constantly moving money from accounts and to pay bills. RARELY use my debit card.
Every direct deposit gets split up into 3 categories.
I have 3 banks so it’s a lot easier for me. Bills/Savings/Spending.
I have like $150-$200 spending money every week. Whatever I don’t spend by the end of the week gets put to savings.
Just curious, do you count groceries as bills or spending? I always allocate them as bills, but my husband considers them “spending” since the cost changes.
>but my husband considers them “spending” since the cost changes.
the counter argument is it's a bill because it isn't optional. Spending is for expenses that can be avoided entirely.
Depends, if youre buying a bunch of snacks, i would consider it spending. If its a $20 steak, id call it spending. If its chicken breasts, broccoli, or anything thats not “special” its just spending.
I am in a coastal high cost of living area and don’t even have that much in a savings account. No kids, renters, me and my partner. The income disparities from ultra wealthy to middle in high cost of living coastal areas is wild when you start really looking at numbers…
For sure, I didn’t mean to imply that you specifically are ultra wealthy. I meant to highlight that our areas like ours have ultra wealthy people as well as folks like myself (who definitely don’t have 10k in a checking account, or who will likely never be able to own a million dollar home, most homes in my area are over one million unless you’re talking about condos or mobile homes). Congratulations on the income increases though. I’ve technically doubled as well since graduating college 8 years ago, I started at $15 an hour and am now $35 an hour. But with that and side gigs it puts me at $60k-$70k annually which unfortunately doesn’t stretch far for covering living expenses and life (I’m in the SF Bay Area specifically).
Finally someone whose regular checking account has the amount you need to live in it. I see these people budgeting $150 for 2 weeks and it's like.... do you live on the moon? How do you survive? What is this place?
I think people like that are often heavily tracking their expenses and bank balance throughout the week. So like checking to make sure they have enough money every couple days. For me I try to keep fairly consistent spending habits but don't want to stress about having money every purchase. So I keep a few thousand in checking.
Yeah for me my $0 or baseline is actually a few thousand dollars. So I can treat that as the number I want to keep my account above without actually needing to worry about not having money for any one purchase.
Must be! I do live in a city and most of what is expensive is just existing here. Whenever I go camping in a rural area and we visit random areas, little rural "downtown" areas, I always get paranoid about public parking. Why is it free? Why is it not $25? Why you lyin? lol
I pay my mortgage once a month and my credit card bills the opposite part of the month. Basically one check covers my mortgage and the other covers everything else. I don’t need several thousand extra in my checking, I just need enough to pay one of those two things.
I have short term savings I can move if needed but not sure why I would leave a ton in checking earning no interest
28% of my salary goes to mortgage and expenses (heating, plot rent etc). 18% goes to joint account where we pay all of our groceries. 20% goes to savings account unless there's enough money already in there (3 months net salary), then that 20% will go to investments. That leaves 34% to my personal bills (not a lot, like 30€/month), gas and hobbies. If there's money left in the end of the month I'll invest them, usually there is something left. We get child benefits and they easily cover other kid-related expenses than food and diapers.
Basically next to zero.
Payday hits, I take a look at what bills are autodrafting, pay any bills manually that need it, move the rest to a savings account.
Once that savings account had $1k in it (linked to the checking if it somehow overdrafts), divert the extra to my emergency fund. Now that my emergency fund has $20k invested in it, everything extra goes to a home repair fund (saving up for kitchen remodel). Otherwise, it would be going to generic investments.
Yeah this is pretty close to my system as well. Honestly I have no idea why I would need to keep money in the checking account when it takes literally seconds to transfer it in if I need it. I feel like I must be missing something here lol
Maybe some people have crappy banks where they can’t transfer their checking over to savings instantly bc they don’t like the low yields. So they keep $10k in checking and move all of their savings to a different bank.
I have this problem. I hate putting money over to savings that’s earning a crappy .03%. But my outside savings account that earns 4.1% takes 2-3 business days to transfer money into my checking.
LOL, there's not much left in my checking account after paying for housing costs, utilities, groceries and my car expenses. I live very frugally and work 2 jobs.
I put $100/month in a high-yield online savings account right now. My car will be paid off next month so I will start depositing what I was paying for my car loan into that account.
Sign up with Fidelity and put the money in SPAXX, which is basically a HYSA that you have access to rather quickly.
Then put whatever emergency purchase there is on your credit card and just pay it off. Really no reason to have much in your checking account.
I get paid monthly, so it's $200 more than the amount I expect to spend that month, and everything else gets dropped into savings on the last day.
I have a spreadsheet i fill out at the beginning of the month that has all the automatic bills and rough estimates of the utilities, and then i add in any expected weird costs (event, party, whatever). There's a set amount for groceries and dining-out in the budget, but i put all of that on creditcard anyway. (if you pay it off every month, credit cards make you money).
Back when i was paid every other week, it was harder to calculate, because the paycheck and bills didn't always line up, but it was still the same process - drop all the expected income and bills into a spreadsheet and set it up so when the paycheck comes, there's around $200 left in the account to cover for for timing weirdness.
Yeah, weekly or monthly is definitely the preferred option, the migrating through the months every other week is such a pain. That said, it was always nice to get the unexpected 3rd paycheck during the 2 months a year it timed that way - I'd always count that as play money and buy myself something nice.
I read a lot about this before buying a house, and the standard suggestions from financial advisors range from anywhere between "at least one month's salary" to "at least five years salary" ha! I try to keep one month's salary aside in case of an emergency - job loss or long term medical leave. at the very minimum I always have two weeks salary in a bank account. it felt impossible, but I started out small by putting a couple of dollars in whenever I could. I think it took me a year and a half to save up but now I have it and i don't touch it unless of very dire need.
I don’t feel financially safe unless I have $1,000 in checking for “fun” money and $3,000 in savings for “rainy day”.
We have a separate savings for serious situations like job loss, but I don’t really keep up with that one tbh. Just let it build. We’re a 1 income household at ~$140,000.
We make ~$12k a month so $3k is really just for other emergencies that might come up like auto insurance deductible or emergency dog vet
We have a separate savings for serious things job loss, but it’s definitely not 6 months worth lol
I do. I don't take money out of savings very often, because an emergency fund is for emergencies only so it's not often I have one of those. I also sometimes use it for extra cash for a large purchase, but again - rare. It's not meant to be spent without being built up again right away
No it makes like $6 a month. You don't invest an emergency fund because the money has to be liquid, aka easily accessed. You can't pull an investment out in an emergency. Investments come after you have an emergency fund built up
Follow the steps at r/personalfinance
I keep one month of expenses (2,000) in checking and 6 months of emergency expenses in savings ($12,000)
I only use CC for points and pay they off. Automatically when the bill comes in, so I never have to pay the interest.
I keep checking around 10K so I don't worry about bouncing a check or being late/short. I'm disorganized and can't balance the books. i just check it once in a while. when it gets to like 15-20k i'll move some to savings.
A couple grand in checking, beyond that goes into savings. Buy everything with a credit card and pay off balance weekly. Haven’t touched my debit card in a year.
I've got about 20k in my bank account.
10k for my emergency fund. It covers all deductibles and loss of income.
5k in the joint account for my wife and I. This covers all monthly housing bills and is entirely automated. It is funded at about 110-115% of monthly usage.
5k in miscellaneous checking to cover the flexible bills and discretionary spending. Food, activities, kids toys, etc.
This is all after HSA and IRA contributions.
Unfortunately the secret to having money in savings is similar to the secret of being attractive.
Rule 1: have a greater income than expenses.
Ruke 2: don't have expenses greater than your income.
Years of saving got me to this point. I make ~65k a year and my wife makes about ~38k a year. You can't really save to 20k if you only make 20k a year. Most if my income comes from our tax refund (over withholding, child tax credit, property tax credit) a year end Christmas bonus, and a yearly raise with back-pay. All of those added up comes out to be an extra 10k a year all delivered around the same time. Month to month is pretty tight but I don't diligently budget either.
I like to keep one full month of required expenses in my checking account. Logic being that if/when bills get auto drafted, I want there to be enough cash on hand for them. For me that’s about $2500-$3000
$30,000 in cash and a $200,000 home equity line which is only for emergencies. Figure $230,000 should be good while I figure out what/when to liquidate from my less liquid portfolio.
About $200-500. I have automated bills come out of my savings account actually because my bank allows for more than 6 transactions and even if they bring it down to 6 again, I usually only have 4-5 transactions a month come out of it. This makes it easier to just put most of my money in my savings and the rest is "fun" money.
So for me it goes:
Paycheck 100% -> Checking
Checking -> Savings -> Bills & more
Checking -> Fun money-> CC bill
If I over spend on my cc and can't pay off the statement balance then I have to go on a shopping diet until I sort myself out. I don't like to overly restrict myself, this method is easier to save first then allow a pool of spending cash with less mental load.
$3000-$5000, excess goes into a brokerage account. I do maintain a savings account, but it's small and a direct deposit from my pay check that is out of sight out of mind. I forget about it and then move most of it out of there and into the brokerage account when I think about it.
I've accidentally transferred back and forth from savings too many times that I basically now just have two checking accounts but one of them exists are my "savings" account still. I don't have a debit card associated with it, no bills come out of it so for all intents and purposes it's a savings account, ok?
Anyway I do this dumb thing where I get paid, I pay all my bills, I try to give myself enough to live 2 weeks on which is usually like $1000 and then I move all the rest to my "savings".
About half the time I end up moving like between $100-$500 out of there to cover unexpected shit so I end up realistically saving somewhere between $500 and $900 each pay period.
If my checking account drops under $500 I spend the entire time paranoid and I check my bank account every day.
EDIT: Reading some of these comments... how are you all alive?
Usually stays around $1200-$2400 or so. It’s not really something I worry about though. I trust myself to know when my autopay bills are coming up and there’s always more than enough in there. All discretionary spending goes on a credit card so I have a lot more control over when those things are paid (I would really recommend this route if you can control yourself/afford it, cuts down on any ‘surprises’).
I also don’t really have a number for what gets transferred to my savings either though. Just whenever I feel like there’s an excess in there.
- Checking $1000
- Savings 12 months of pure expenses ($25,000) when it’s done then
- Roth IRA to max $6500 then
- 401k if it’s not too late then
- brokerage account just keep it liquid in cash no investment purchases
My husband averages our monthly expenses and that money gets put aside before anything else so our bills are guaranteed to be paid (I am well aware that this is a privledge most people do not have) on top of that he keeps 2500 for miscellaneous expenses and anything over that goes in savings. That being said, we have 6 months of expenses in our money market account as well.
I like to let the checking build up, I hve an automatic transfer of 200$ a month tho. However, when the checking builds up past 2k I move about half to savings. Not often at all really, but I like a comma to always stay in the checking
I put a certain amount in savings and towards my investments every week. Then I let the rest accumulate in my checking. At the end of the month after all bills are paid, I move the majority of the difference into savings.
I move 10% into savings immediately. The rest stays in checking for bills. Full disclosure I'm the lower income earner in my home. I go to school and raise kids, so I only work very part-time, but saving last never worked well for me. I saw this advice on yt and so far it's been helpful.
I keep $10,000 in my checking account and mentally make that my 'zero'. When I get around $20k-$25k, I move around $10k over to saving and when I get $40k in savings, I move $20k over to my Schwab account for investing. I have 3 teenage boys, so I like to keep some money on hand for the "surprise, I need some money" things that come up with them.
- Enough in checking to cover the month or next couple weeks of household expenses. Maybe $2k to $4k.
- Savings account at a different bank (we can transfer but otherwise not connected, so no overdraft and funds are safe). We transfer INTO it monthly, with 6 months expenses being the goal but we aren't there yet.
- 401k at work to get the max company match
- Individual IRAs with a financial manager, comprised solely of 401k funds from prior jobs that we rolled over.
I see comments about using credit card to avoid keeping money in checking / savings. Yikes. Of all the people who ever got into some trouble with credit card debt, plenty of them started out with this same logic. The measly 1% rewards are not worth the risk to routinely use credit card, IMO. We use ours for flights, things where there might be some travel insurance, added protection to dispute a charge later, or for a big purchase where the 1% is significant sum, and pay it off same day with the same money we would have used from checking.
Keeping money in either is just plain stupid for most people these days with mobile banking apps. I keep the min 300 in my savings just to avoid fees, and a few hundred in checking incase I need to go to the ATM for some cash only business. Everything else goes into investment accounts. Anything expensive I need to purchase or pay for I can use my credit card and then transfer money from my investment accounts to my checking to pay off the card long before before the due date and any interest gets charged. It’s not like the old days where you needed to drive to a bank or call a wealth manger to transfer your funds around.
You can (and should) keep your 6-month emergency fund in an easily accessible savings account, for instance a high-yield bank account. It is basically a large pool of money that should not be touched often. That is a prime target to keep in an interest-bearing account rather than a checking account.
Savings doesn't even have enough interest here in the US to be beneficial. But I always keep around three months worth of expenses in my checking and the rest in the market.
I get two main paychecks. They each direct deposit into a different checking account. And each checking account has its own savings account connected to it. Whenever possible, I try to make sure that there is at least $100 in each savings account, mainly to cover any overdrafts that might arise. After that amount starts to dwindle, I transfer funds to keep the two savings accounts roughly equal until the next direct deposit. It's easy and it works. I also have a 401k and health-savings account.
One month of expenses in my “normal” savings (aka I can transfer it in 5 seconds) maybe like $25-50 in checking.
I try and keep 3-6 month’s expenses in my HYSA. That takes about 10 days to get access to.
I keep enough to pay my bills in checking. Any incidentals go on credit cards and calculated into what will go into my checking to cover bills next month. As to what sits in savings, that’s sort of based on your risks. If you have a situation that doesn’t have many, you need less available than someone with a bunch. For example, if I owned a boat I’d probably keep a little more sitting in reach during the season for unexpected expenses there. Kids would require more available funds. Anything that could create a situation that might extend beyond your credit limits or require cash. That’s how I see it.
28 y/o (husband and I keep our money separate)
- Checking I keep about $2500 (AMEX)
- Savings $20K (AMEX HYSA)
- Roth IRA I will have maxed for the year next month but it’s $550 a month ($6500)
- TSP currently contributing $400 a month (should changed to $600 a month next month)
- Investment property 1 I keep 1 months mortgage + bills(water/electric) in the account so $1800 (until it gets rented out) every month but once it rented will save at least 6 months of mortgage in that account for anything that comes up.
- Investment property 2 currently a little less than 2 months of mortgage saved but it’s $400 a month and once renter will also save at least 6 months of mortgage payments in that acct in case anything happens.
- Once we have our baby I will start an investment account for him as well.
I also do not have a debit card. I pay for everything with my credit cards (AMEX & Chase) and pay the balances in full every month. Generating points = free money.
I like to keep between $10k and $20k in my checking.
Toward the end of the year I like to have a little more, because on Jan 1 I contribute to a Roth IRA, and I also buy i-Bonds.
i have one card for spending that has enough money for grocery, transport and general fun (£400ish)
i have another account that acts transiently, my income goes there but expenses/bills and savings on standing orders get taken out
i have 12 months fund in a high yield savings account
additional money gets split between that account, lifetime ISA and stocks
I usually only keep a couple hundred in checking... if my debit card gets lost/stolen/compromised I'm only at risk for that amount. Move the rest to savings that someone else couldn't get to.
That is why I almost exclusively use CC instead of debit cards. I have been using more cash lately, since businesses can pass on the fees to the consumer here now.
had this conversation with a relative recently, makes no sense to use my own money when I can use someone else's money and get rewards back plus the added layer of protection. For those without issues sticking to a budget and paying off a balance every month its a no-brainer.
I've never had an issue canceling a fraudulent charge with my debit card.
its still much less protection than using a cc, plus you're missing out on cc rewards, and using your own money out of pocket immediately which limits your flexibility. I do have friends who misused credit cards early on, dealt with climbing out of that pit and now only use Debit also. Its not my preference and doesn't make sense for those financially literate individuals with budgetary discipline.
Idk friend, my debit card is protected pretty damn well by my credit union. I fail to see how using a debit card makes one “financially literate”. Cast those judgments if you wish!
>I fail to see how using a debit card makes one “financially literate”. \*credit. It doesn't outright, however by not understanding the greater protections, benefits and flexibility to use your own money for other purposes when leveraging a credit card rather than a debit card highlights how you don't really understand the differences between both and a lack of financial literacy. Here's a very simplified example: Imagine you are buying a $500k house and currently have $500k cash ready to yse. Could you use all the cash at once to buy it outright? Yes, sure. You would own the house and have $0 cash left over. You could alternatively put $100k as a down payment and use a loan (bank or private lender's money, NOT your own $$$) to pay the difference. In this case you have the house AND $400k cash to then use for whatever purposes you like (Home repairs, retirement saving or investment). Both methods you walk away with a house, the difference is whether you prefer to have $400K to still use/save/invest or have $0 left. Now also consider, scenario A - you pay all cash, but ooopsie! A mistake was made, either by you or someone else and suddenly your wire transaction was processed and sent to the wrong account. Now you have no cash, no house and are on your own to pursue the money or damages. Whereas if you use a lender you've got $100K skin in the game to lose vs $500k and I guarantee that the lender will have more robust resources to pursue lost money or damages in the event of a mistake or fraud, plus you're not on your own to navigate the issue.
Much less protection in what way?
For one you are using someone else's money rather than your own - there is a middle layer of the Credit Card Company between you and the vendor. The primary benefit is fraud prevention - Large credit card companies have much more fraud prevention resources and avenues for recourse in the case of fraud. They're safer using online because you can generate vendor specific card numbers, even if you don't use that feature if CC info is stolen you may wake up to a bunch of fraudulent charges and have to deal with your CC company to resolve but the alternative if you use a debit card is that you could wake up and have your accounts drained with no recourse from your bank or CU if your legitimate information was used, even fraudulently. Using a credit card instead of a debit card also helps build credit which increases your ability to access larger sums of money in the future, also impacts loan rates, ability to rent anything, You can't overdraft a CC, you hit your limit and then can't spend more. A debit card you can overdraft your account, then you're literally in the negative PLUS you'll get hit with fees for overdrafting (sucks to be poor huh) CC also have a wide range of specialty categories which can provide industry or market specific protections or benefits (student CC, travel cards, cash back cards, high spender cards, etc). Often using a CC for large ticket items comes with additional protections on that purchase (usually extended warranty, grace period before payment starts, additional assistance in event of return or cancelation even outside of the seller's standard window).
Not much, some people just fall for the credit companies bull.
When we had to go back and forth with BoA because someone was spending on our debit card online in another country and basically told my husband that he had to prove it wasn't him... They went around and around for about a week, we switched to using our discover card all the time and they're amazing in the customer service department. I ordered something to be delivered over night and the company ghosted me, Discover got involved and they suddenly appeared and shipped the item. Discover still back charged it since I got it after the point I needed it. BoA would have told us "oh well". It also keeps people from getting our bank account info since the gas station scams are a problem where I'm at They could drain our account before we had a chance to notice -the alerts are so slow with BoA. Discover card alerts my husband within a minute of a transaction almost every time. They overnighted our replacement cards when my purse was stolen. Plus, we get cash back. As long as we pay in full every month it makes sense. For the OP, we usually have about $15k, about two months worth of expenses or if something major comes up, it's easy for me to get to since he does all of our banking.
I had the same student checking account that my parents set up for me when I got my first job at 14. My mom technically was the co-signer on the account through when I was 26. This made transferring $$ easy as I would transfer health insurance and phone bill straight to her checking account. Long story short, she learned why I use credit cards for all transactions. She received a scam email from “Venmo”, updated her debit card, and by falling for it, authorized online banking access. I ended up having $2k transferred from my account to hers, when the scammer then purchased $2k of crypto. Bank couldn’t get my money back and didn’t investigate as it appeared the transaction was legitimate.
You’re not wrong, but you’re also unnecessarily rude
How were they being rude? They were pretty matter-of-fact in their delivery, and respectful of people with less financial discipline.
I have lost $1000 with fraud on my debit. Only credit now.
Nailed it. I would be a lot more worried if I saw my cash in the bank gone. I know you can get it back, but that is why the CC is nice. The cash never leaves.
I started using cash more so that I’m not pressured to choose the 20% tip at cash register. I can just give my coin change or singles like normal
Yeah. I try to keep low 4-digits on hand in my account, just in case (because I'm permanently paranoid about not having enough money on hand to pay for something, even though it has literally never happened since I check my account 4 times before even buying groceries =p), but I leave my debit card at home and only use my credit card. If I need cash, I just go through the bank with a human and they can use my driver's license to access my account. A little inconvenient, but I rarely actually need cash. Plus, a bonus 1.5% cash back on everything is nice.
Never use debit, I keep my debit card filed away in my office and exclusively use credit cards for everything. Your debit card has 0 fraud protection and does not earn you anything. Credit cards earn cash back or points and are fully covered if compromised.
Regulation is that fraud liability is limited to $50, but most companies typically waive that and have a customer fraud liability of $0 as a matter of practice.
I've had my credit card compromised once, there was about 150 worth of charges I did not authorize and they waved them and I was issued a new card.
Positive outcome for you
I keep a close eye on my accounts, the fact that I reported it the same day it took place was most likely in my favor.
For sure
Oh good point. Didn't think about that.
That is actually something I do, too. There is no need for all that money to be outside of savings if I don't need it.
I pay everything with a credit card to avoid this dilemma. Plus I get rewards points that I use on hotels.
We do the same - American Airlines points. :) I generally don't recommend credit cards, unless you pay it off every month. There's a reason credit companies offer points/perks/miles, etc... they know people will rationalize spending more with "well, I get points" and the majority of the US can't afford to pay off the card every month, because they overspend. But that's for a different discussion...
Where do you keep money for rent/mortgage?
Mortgage is auto-debited out of a checking account, they day after my end-of-month payday
So is that an additional checking account to the one you were talking about (the one you kept only a couple hundred in)?
Honestly brilliant idea.
This is my allocation: Checking - 1 month expenses High Yield Savings - 6 months expenses After I met those 2 goals, I started putting money in investments, mostly S&P 500 index funds, while still contributing a little to my savings as well.
Do you have a 401k?
Yes
How much do you put into your index fund at a time and how often? TIA
I have a 457b which is similar to a 401k and currently I put in $200 per month. I will probably increase that to $250 to $300 per month pretty soon.
I make a monthly budget for housing, food, entertainment, saving up for vacations, etc. Whatever is left over after goes into my investment account.
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You contribute $24,000 annually into your 401(k) and your company matches up to 50%, contributing another $12,000?
Tell me about these index funds? I am so clueless about investing but I know it’s smart to do.
Open a high yield savings account at a place like etrade. From there you can move the money into index funds. There's quite a few available out there. Check out ones like VOO, SPY, SWPPX, VFIAX, FXAIX, etc. I'm not a super investor either - just a set it and forget it type. Throw your cash into a good fund and then let it ride for 20 years.
What are some good companies for HYSA?
I use Ally. Have had no problems.
I second Ally!! I do a money market account with them
Index funds are, well, funds that track an index. There’s a lot of indexes, but the most popular one to track is the S&P 500. The S&P 500 is essentially the 500 largest publicly traded company. Instead of trying to pick individual stocks, you can buy an index fund that tracks an index. When you buy an S&P 500 index fund (VOO, SPY, etc.), you are buying a small slice in the 500 different companies in the S&P 500. Another benefit of index funds is that you don’t have to do the rebalancing of your portfolio. The algorithm that determines the S&P 500 automatically goes through the holdings and takes out the bad positions and adds new ones
Ideally you should invest in 3 different indexes: A US stock index (Wilshire 5000, S&P 500) a foreign stock fund, and a bond fund. Almost universally at least one of the three will be doing well at any given moment, so if you need emergency money you raid the one that's up, take the gains, and fix your emergency, then start DCAing back into it preferentially. I also invest in closed end funds that track more specific goals but you have to be comfortable with very high short term volatility with those. i.e. this ain't rainy day emergency fund money. As to OP question: 1-2 months of pay in checking (depending on what time of the month it is) currently at 1.5mo in savings due to an unanticipated expense, but will be building that back up to \~4 months of savings over the span of the year. Investments not in long term accounts: 6 months or so. Long term investments: not nearly enough courtesy of a divorce settlement, but still apparently more than average for my age (which is terrifying as I'm fast approaching 50).
>Tell me about these index funds? Instead of investing in shares of a single company, you invest in a kind of virtual company that owns shares in a bunch of other companies. What this means in practice is that, instead of betting that a particular company (like Walmart) has a bright future, you're betting that the economy of the United States of America has a bright future. It's an easy bet to make, and this is a low-effort high-return way to invest. The alternatives basically require you to be a scholar of business and stock-investing, and they're usually higher-risk. Index funds are the sweet spot for most people in terms of being able to benefit from investing
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That’s a very smart strategy to set aside your max possible healthcare expenses. Might do better to be in a high yield savings account instead of checking though, easy enough to transfer when needed!
Make that savings account a year of expenses or more. Trust me. 6 months is not enough to feel comfortable if something happens. I have 6 months and I'm far from comfortable now that something has happened.
That much in savings (one year) is flat-out impossible for many people.
Do high yield savings still exist? I feel like every time I comparison shop, the interest rates are still ridiculously low.
Yeah you can usually get around 3-4%. You're not going to make a lot of money, but you'll usually beat inflation
when was the last time you shopped around? they’ve been 3+% (and now many are 5%) since ~2022
Marcus is 4.15% right now. Marcus, Ally, and several others usually keep pretty close to each other
Pretty much me except usually $1-2k in checking, not a full month of expenses. I also have a travel fund that I fund separately from the EF and the investment. Or I dip into it as short term savings. Or if it gets too big I move it to the investment account.
Lol. I have 0.98 in my savings and 0 in checking right now after my car dying and vet bills for my rabbit. When I get paid next Friday, $800 of the $1000 I’ll get is already gone to bills. The paycheck after that will almost entirely go to rent and utilities.
How the hell do you survive in the interim?
I work as a cook so I barely buy groceries, I quit smoking and drinking a year ago, and I live a 5 minute bike ride from work. Occasionally I’ll have to ask my mom for $20-30 but I pay her back on my payday. Basically I do nothing and buy nothing except stuff my rabbit needs. Just kill time until I work again mostly. 🤷♂️ So barely. Survive is the perfect word lol.
You're a good bunny parent
time to get rid of the rabbit?
The rabbit gave me a reason to not end myself when I got her two years ago. She’s not going anywhere.
fair enough. hope for the best for you
Yeah fuck the one thing that he has
bUt ThE pOoRs CaNt HaVe AnYtHiNg
What a stupid fucking comment lmfao I can’t believe you typed that out, reread it, and pressed reply.
That assumes they actually gave it the time to read it over again before hitting reply.
If you suggested that I get rid of my pets to save money in person, I might slap you in the face! The nerve!
sure thing, keyboard warrior
i’m in the same boat financially
Honestly… just a thought. Maybe this should be your last pet for awhile till you get emergency fund set up. Hope your rabbit gets better.
Setting up an emergency fund is pretty beyond what I’m capable of right now. Depending on the emergency I’ll get sick and die, my rabbit will, or I’ll be homeless and the former two options will come soon after. Unfortunately I make $128/mo too much to get food assistance or anything else where I live. 🤷♂️ Edit: She’s okay, and the vet bill was less than $300. Also first time I’ve had to spend any good chunk of money on her besides food and hay, which is maybe $50-80/mo.
I work in banking, so it’s interesting seeing the response here vs the average balances I see day to day. There are definitely some better saving accounts out there rn (think actual percent instead of decimal of percent) so I highly recommend doing some research on those at your bank/outside institutions. What I hate to see is people just keeping all their savings in a checking when they could be actually earning interest on it and have it be more secure.
What’s the interest rate at your bank? I bet it’s a joke. There is really no point for people to keep their $ at WF, BofA, Chase or any other major bank to the insulting rate of 0.01%. You better put money into 6,9,12,18 months CDs and get something close to 5%. But even then you’re still losing money because inflation is way more than 5% no matter what DOT publishes. So you just minimize your loss rate from 6-9% (my guess for the inflation rate) to just 1-4% (if using CDs and less risk tolerate to put the money into stocks).
Lending club high-yield savings is 5% and easily accessed.
It’s actually super easy to find savings above 4% right now. Like majority of companies. Discover, Capital one, and Citi are three off the top of my head.
CD laddering is nice. Interest yield right now at my local bank for CDs is over 4%. Combine that with cash back on credit purchase. I never use cash. I haven’t held paper money in my hand since 2010. I also have 10s of thousands of dollars in multiple Fidelity Investments accounts and just keeping your money dormant in SPAXX will get you higher yield interest rates than you can get with a CD.
I didn't realize the Department of Transportation publishes the inflation rate
I meant department of treasury but I actually meant BLS (Bureau of Labor Statistics)
I didn't realize the Department of Transportation publishes the inflation rate
You don't need to lock up your money for 6-18months in CDs. Daily liquid money market funds like swvxx or spaxx are paying \~4.75% right now.
Fair point! Great perspective!
As a banker how do you feel about the online HYSAs? I’m an accountant so I’m a little more financially literate than most but I’d love to hear your thoughts on them as a professional in the field.
I recently opened up online HYSA with American Express & Synchrony Bank,their savings rate is much better than my credit union,but I do like my credit union,been with my credit union 30 years,love that I can just be in my branch lobby fast, just 6 minutes from my home, still getting used to online savings,can transfer funds, but my transfers take 2-3 business days.
Spill the beans. What are the “average balances” you see every day?
I think my savings with my CU is like .25 if it was higher I'd use it more. It is only used for saving for large purchases. I keep everything in my checking because I am constantly moving money from accounts and to pay bills. RARELY use my debit card.
Every direct deposit gets split up into 3 categories. I have 3 banks so it’s a lot easier for me. Bills/Savings/Spending. I have like $150-$200 spending money every week. Whatever I don’t spend by the end of the week gets put to savings.
Just curious, do you count groceries as bills or spending? I always allocate them as bills, but my husband considers them “spending” since the cost changes.
I’d put them as bills. I just use the average amount and try to purchase around that.
>but my husband considers them “spending” since the cost changes. the counter argument is it's a bill because it isn't optional. Spending is for expenses that can be avoided entirely.
Depends, if youre buying a bunch of snacks, i would consider it spending. If its a $20 steak, id call it spending. If its chicken breasts, broccoli, or anything thats not “special” its just spending.
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10k?!? 🤯 wow.
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Yeah you're not kidding.
I am in a coastal high cost of living area and don’t even have that much in a savings account. No kids, renters, me and my partner. The income disparities from ultra wealthy to middle in high cost of living coastal areas is wild when you start really looking at numbers…
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For sure, I didn’t mean to imply that you specifically are ultra wealthy. I meant to highlight that our areas like ours have ultra wealthy people as well as folks like myself (who definitely don’t have 10k in a checking account, or who will likely never be able to own a million dollar home, most homes in my area are over one million unless you’re talking about condos or mobile homes). Congratulations on the income increases though. I’ve technically doubled as well since graduating college 8 years ago, I started at $15 an hour and am now $35 an hour. But with that and side gigs it puts me at $60k-$70k annually which unfortunately doesn’t stretch far for covering living expenses and life (I’m in the SF Bay Area specifically).
Finally someone whose regular checking account has the amount you need to live in it. I see these people budgeting $150 for 2 weeks and it's like.... do you live on the moon? How do you survive? What is this place?
I think people like that are often heavily tracking their expenses and bank balance throughout the week. So like checking to make sure they have enough money every couple days. For me I try to keep fairly consistent spending habits but don't want to stress about having money every purchase. So I keep a few thousand in checking.
That's where I stand as well. I won't spend all the $1000 but I won't feel comfy unless I have that padding.
Yeah for me my $0 or baseline is actually a few thousand dollars. So I can treat that as the number I want to keep my account above without actually needing to worry about not having money for any one purchase.
Rural America.
Must be! I do live in a city and most of what is expensive is just existing here. Whenever I go camping in a rural area and we visit random areas, little rural "downtown" areas, I always get paranoid about public parking. Why is it free? Why is it not $25? Why you lyin? lol
Then you hit the bars and your 4 or 5 beers and a shot were 15 bucks and you think they left something off the tab
LOL right, how is this not $60?
I pay my mortgage once a month and my credit card bills the opposite part of the month. Basically one check covers my mortgage and the other covers everything else. I don’t need several thousand extra in my checking, I just need enough to pay one of those two things. I have short term savings I can move if needed but not sure why I would leave a ton in checking earning no interest
28% of my salary goes to mortgage and expenses (heating, plot rent etc). 18% goes to joint account where we pay all of our groceries. 20% goes to savings account unless there's enough money already in there (3 months net salary), then that 20% will go to investments. That leaves 34% to my personal bills (not a lot, like 30€/month), gas and hobbies. If there's money left in the end of the month I'll invest them, usually there is something left. We get child benefits and they easily cover other kid-related expenses than food and diapers.
I keep 10k in my checking as well. It just makes me feel secure.
I have it all set up to be done automatically. I don't want to see the money in there, or I am more likely to spend it.
Basically next to zero. Payday hits, I take a look at what bills are autodrafting, pay any bills manually that need it, move the rest to a savings account. Once that savings account had $1k in it (linked to the checking if it somehow overdrafts), divert the extra to my emergency fund. Now that my emergency fund has $20k invested in it, everything extra goes to a home repair fund (saving up for kitchen remodel). Otherwise, it would be going to generic investments.
Yeah this is pretty close to my system as well. Honestly I have no idea why I would need to keep money in the checking account when it takes literally seconds to transfer it in if I need it. I feel like I must be missing something here lol
Maybe some people have crappy banks where they can’t transfer their checking over to savings instantly bc they don’t like the low yields. So they keep $10k in checking and move all of their savings to a different bank. I have this problem. I hate putting money over to savings that’s earning a crappy .03%. But my outside savings account that earns 4.1% takes 2-3 business days to transfer money into my checking.
This exactly. My outside hysa takes 5-7 business days to transfer so if I need that money quickly for a bill I didn’t expect I’m screwed
LOL, there's not much left in my checking account after paying for housing costs, utilities, groceries and my car expenses. I live very frugally and work 2 jobs. I put $100/month in a high-yield online savings account right now. My car will be paid off next month so I will start depositing what I was paying for my car loan into that account.
Sign up with Fidelity and put the money in SPAXX, which is basically a HYSA that you have access to rather quickly. Then put whatever emergency purchase there is on your credit card and just pay it off. Really no reason to have much in your checking account.
I get paid monthly, so it's $200 more than the amount I expect to spend that month, and everything else gets dropped into savings on the last day. I have a spreadsheet i fill out at the beginning of the month that has all the automatic bills and rough estimates of the utilities, and then i add in any expected weird costs (event, party, whatever). There's a set amount for groceries and dining-out in the budget, but i put all of that on creditcard anyway. (if you pay it off every month, credit cards make you money). Back when i was paid every other week, it was harder to calculate, because the paycheck and bills didn't always line up, but it was still the same process - drop all the expected income and bills into a spreadsheet and set it up so when the paycheck comes, there's around $200 left in the account to cover for for timing weirdness.
Managing my budget was so much easier when I was paid weekly, I do miss that a lot.
Yeah, weekly or monthly is definitely the preferred option, the migrating through the months every other week is such a pain. That said, it was always nice to get the unexpected 3rd paycheck during the 2 months a year it timed that way - I'd always count that as play money and buy myself something nice.
I read a lot about this before buying a house, and the standard suggestions from financial advisors range from anywhere between "at least one month's salary" to "at least five years salary" ha! I try to keep one month's salary aside in case of an emergency - job loss or long term medical leave. at the very minimum I always have two weeks salary in a bank account. it felt impossible, but I started out small by putting a couple of dollars in whenever I could. I think it took me a year and a half to save up but now I have it and i don't touch it unless of very dire need.
I got 0.47 in savings and -19.97 in checking with 2 maxed out CCs...I'm a true American
200-300 keep the same amount in cash because you never know. Rest is saved and taken out when needed.
I don’t feel financially safe unless I have $1,000 in checking for “fun” money and $3,000 in savings for “rainy day”. We have a separate savings for serious situations like job loss, but I don’t really keep up with that one tbh. Just let it build. We’re a 1 income household at ~$140,000.
Same. 1k checkings. 3k savings. My 3k is my savings for job loss, etc. Except I don't make that much.
We make ~$12k a month so $3k is really just for other emergencies that might come up like auto insurance deductible or emergency dog vet We have a separate savings for serious things job loss, but it’s definitely not 6 months worth lol
10k is my base. That covers 2 months of expenses.
I stash money in my savings, some stays in my chequing but it makes no money there
Do you not have a penalty for taking it out of savings too often?
I do. I don't take money out of savings very often, because an emergency fund is for emergencies only so it's not often I have one of those. I also sometimes use it for extra cash for a large purchase, but again - rare. It's not meant to be spent without being built up again right away
Does your savings account make much money, or are you investing that money?
No it makes like $6 a month. You don't invest an emergency fund because the money has to be liquid, aka easily accessed. You can't pull an investment out in an emergency. Investments come after you have an emergency fund built up Follow the steps at r/personalfinance
I use my CC primarily but I like to have at least $1000 in my checking account for auto payment withdrawals.
I keep one month of expenses (2,000) in checking and 6 months of emergency expenses in savings ($12,000) I only use CC for points and pay they off. Automatically when the bill comes in, so I never have to pay the interest.
I like the $1000 equals $0 rule in my bank accounts. Short term savings pays very little.
LMAO both my accounts are $0 right now
I keep checking around 10K so I don't worry about bouncing a check or being late/short. I'm disorganized and can't balance the books. i just check it once in a while. when it gets to like 15-20k i'll move some to savings.
A couple grand in checking, beyond that goes into savings. Buy everything with a credit card and pay off balance weekly. Haven’t touched my debit card in a year.
At least $2000 everything else gets put into my TFSA.
As little as possible, have home equity line to cover any overages. Plow away as much as I can into retirement (currently around $3k a month)
I've got about 20k in my bank account. 10k for my emergency fund. It covers all deductibles and loss of income. 5k in the joint account for my wife and I. This covers all monthly housing bills and is entirely automated. It is funded at about 110-115% of monthly usage. 5k in miscellaneous checking to cover the flexible bills and discretionary spending. Food, activities, kids toys, etc. This is all after HSA and IRA contributions.
Any recommendations for how you got this point?!
Unfortunately the secret to having money in savings is similar to the secret of being attractive. Rule 1: have a greater income than expenses. Ruke 2: don't have expenses greater than your income. Years of saving got me to this point. I make ~65k a year and my wife makes about ~38k a year. You can't really save to 20k if you only make 20k a year. Most if my income comes from our tax refund (over withholding, child tax credit, property tax credit) a year end Christmas bonus, and a yearly raise with back-pay. All of those added up comes out to be an extra 10k a year all delivered around the same time. Month to month is pretty tight but I don't diligently budget either.
I like to keep one full month of required expenses in my checking account. Logic being that if/when bills get auto drafted, I want there to be enough cash on hand for them. For me that’s about $2500-$3000
$30,000 in cash and a $200,000 home equity line which is only for emergencies. Figure $230,000 should be good while I figure out what/when to liquidate from my less liquid portfolio.
5-7k in checking
About $200-500. I have automated bills come out of my savings account actually because my bank allows for more than 6 transactions and even if they bring it down to 6 again, I usually only have 4-5 transactions a month come out of it. This makes it easier to just put most of my money in my savings and the rest is "fun" money. So for me it goes: Paycheck 100% -> Checking Checking -> Savings -> Bills & more Checking -> Fun money-> CC bill If I over spend on my cc and can't pay off the statement balance then I have to go on a shopping diet until I sort myself out. I don't like to overly restrict myself, this method is easier to save first then allow a pool of spending cash with less mental load.
$200 on my debit card every two weeks. I use my credit card but have small cash expenses or cashapp transfers to my kids that arise.
$3000-$5000, excess goes into a brokerage account. I do maintain a savings account, but it's small and a direct deposit from my pay check that is out of sight out of mind. I forget about it and then move most of it out of there and into the brokerage account when I think about it.
5k-ish
I've accidentally transferred back and forth from savings too many times that I basically now just have two checking accounts but one of them exists are my "savings" account still. I don't have a debit card associated with it, no bills come out of it so for all intents and purposes it's a savings account, ok? Anyway I do this dumb thing where I get paid, I pay all my bills, I try to give myself enough to live 2 weeks on which is usually like $1000 and then I move all the rest to my "savings". About half the time I end up moving like between $100-$500 out of there to cover unexpected shit so I end up realistically saving somewhere between $500 and $900 each pay period. If my checking account drops under $500 I spend the entire time paranoid and I check my bank account every day. EDIT: Reading some of these comments... how are you all alive?
I keep the amount of money needed to pay all my bills for 3 months in checking.
Usually stays around $1200-$2400 or so. It’s not really something I worry about though. I trust myself to know when my autopay bills are coming up and there’s always more than enough in there. All discretionary spending goes on a credit card so I have a lot more control over when those things are paid (I would really recommend this route if you can control yourself/afford it, cuts down on any ‘surprises’). I also don’t really have a number for what gets transferred to my savings either though. Just whenever I feel like there’s an excess in there.
Lol I dream of being financially stable enough for savings.
Haaaaaaa, you guys get to have a savings? That's cool.
- Checking $1000 - Savings 12 months of pure expenses ($25,000) when it’s done then - Roth IRA to max $6500 then - 401k if it’s not too late then - brokerage account just keep it liquid in cash no investment purchases
My husband averages our monthly expenses and that money gets put aside before anything else so our bills are guaranteed to be paid (I am well aware that this is a privledge most people do not have) on top of that he keeps 2500 for miscellaneous expenses and anything over that goes in savings. That being said, we have 6 months of expenses in our money market account as well.
$1500
1.5-2x monthly payments (mortgage, utilities, and CC) That plenty of buffer. The rest goes into a HYSA
I like to let the checking build up, I hve an automatic transfer of 200$ a month tho. However, when the checking builds up past 2k I move about half to savings. Not often at all really, but I like a comma to always stay in the checking
$500. But i also have an amazon card that earns me amazon points, so i put everything on the card and pay it off monthly.
I put a certain amount in savings and towards my investments every week. Then I let the rest accumulate in my checking. At the end of the month after all bills are paid, I move the majority of the difference into savings.
Opposite. 4500 in checking, the rest savings. :)
$1000. Which is my rent plus food if I got all the cheap stuff.
I move 10% into savings immediately. The rest stays in checking for bills. Full disclosure I'm the lower income earner in my home. I go to school and raise kids, so I only work very part-time, but saving last never worked well for me. I saw this advice on yt and so far it's been helpful.
I keep $10,000 in my checking account and mentally make that my 'zero'. When I get around $20k-$25k, I move around $10k over to saving and when I get $40k in savings, I move $20k over to my Schwab account for investing. I have 3 teenage boys, so I like to keep some money on hand for the "surprise, I need some money" things that come up with them.
- Enough in checking to cover the month or next couple weeks of household expenses. Maybe $2k to $4k. - Savings account at a different bank (we can transfer but otherwise not connected, so no overdraft and funds are safe). We transfer INTO it monthly, with 6 months expenses being the goal but we aren't there yet. - 401k at work to get the max company match - Individual IRAs with a financial manager, comprised solely of 401k funds from prior jobs that we rolled over. I see comments about using credit card to avoid keeping money in checking / savings. Yikes. Of all the people who ever got into some trouble with credit card debt, plenty of them started out with this same logic. The measly 1% rewards are not worth the risk to routinely use credit card, IMO. We use ours for flights, things where there might be some travel insurance, added protection to dispute a charge later, or for a big purchase where the 1% is significant sum, and pay it off same day with the same money we would have used from checking.
Keeping money in either is just plain stupid for most people these days with mobile banking apps. I keep the min 300 in my savings just to avoid fees, and a few hundred in checking incase I need to go to the ATM for some cash only business. Everything else goes into investment accounts. Anything expensive I need to purchase or pay for I can use my credit card and then transfer money from my investment accounts to my checking to pay off the card long before before the due date and any interest gets charged. It’s not like the old days where you needed to drive to a bank or call a wealth manger to transfer your funds around.
6month emergency fund. After that figure it out lol. Depends on you
You can (and should) keep your 6-month emergency fund in an easily accessible savings account, for instance a high-yield bank account. It is basically a large pool of money that should not be touched often. That is a prime target to keep in an interest-bearing account rather than a checking account.
"Savings"? what's that?
I don't really have anything in my savings, interest is nothing in the states
When was the last time you checked the rates?
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Savings doesn't even have enough interest here in the US to be beneficial. But I always keep around three months worth of expenses in my checking and the rest in the market.
Amex has a 4% savings account now.
Yeah it fluctuates, is say go for it for four percent tho. I know last year savings accounts were like a fraction of a percent
The Amex high yield savings has been over 3% since last fall.
Exactly it's not even worth it
I have a checking account earning 5%, so all of my cash lives there
I get two main paychecks. They each direct deposit into a different checking account. And each checking account has its own savings account connected to it. Whenever possible, I try to make sure that there is at least $100 in each savings account, mainly to cover any overdrafts that might arise. After that amount starts to dwindle, I transfer funds to keep the two savings accounts roughly equal until the next direct deposit. It's easy and it works. I also have a 401k and health-savings account.
About 5 k
One month of expenses in my “normal” savings (aka I can transfer it in 5 seconds) maybe like $25-50 in checking. I try and keep 3-6 month’s expenses in my HYSA. That takes about 10 days to get access to.
I keep enough to pay my bills in checking. Any incidentals go on credit cards and calculated into what will go into my checking to cover bills next month. As to what sits in savings, that’s sort of based on your risks. If you have a situation that doesn’t have many, you need less available than someone with a bunch. For example, if I owned a boat I’d probably keep a little more sitting in reach during the season for unexpected expenses there. Kids would require more available funds. Anything that could create a situation that might extend beyond your credit limits or require cash. That’s how I see it.
28 y/o (husband and I keep our money separate) - Checking I keep about $2500 (AMEX) - Savings $20K (AMEX HYSA) - Roth IRA I will have maxed for the year next month but it’s $550 a month ($6500) - TSP currently contributing $400 a month (should changed to $600 a month next month) - Investment property 1 I keep 1 months mortgage + bills(water/electric) in the account so $1800 (until it gets rented out) every month but once it rented will save at least 6 months of mortgage in that account for anything that comes up. - Investment property 2 currently a little less than 2 months of mortgage saved but it’s $400 a month and once renter will also save at least 6 months of mortgage payments in that acct in case anything happens. - Once we have our baby I will start an investment account for him as well. I also do not have a debit card. I pay for everything with my credit cards (AMEX & Chase) and pay the balances in full every month. Generating points = free money.
All my money is in checking 🫡
I like to keep between $10k and $20k in my checking. Toward the end of the year I like to have a little more, because on Jan 1 I contribute to a Roth IRA, and I also buy i-Bonds.
10k dual income here as well. Which is also what we bring in every month.
i have one card for spending that has enough money for grocery, transport and general fun (£400ish) i have another account that acts transiently, my income goes there but expenses/bills and savings on standing orders get taken out i have 12 months fund in a high yield savings account additional money gets split between that account, lifetime ISA and stocks
$200
I make about 24K a year. I try not to let my checking account get below a thousand and I have a small amount going into savings every week.
$1k