If you have a checking account or savings account, you’ve probably wondered, “How much cash should I keep in the bank?” The answer changes depending on who you ask. While there’s no amount that’s universally agreed upon, there are different savings formulas you can adopt into your monthly budget. If you haven’t done so already, upgrading to online banking gives you the benefit of always knowing what’s in your account. Read on for suggestions on how much to keep in your checking account and savings account.
What to Keep in Your Checking Account
Generally, it’s a good idea to keep at least one month’s take-home pay in your checking account. Should you need to make an unexpected purchase, you’ll have a cushion that’ll keep you from living paycheck-to-paycheck. You won’t feel helpless if an emergency arises, or if your paycheck doesn’t arrive on time. Do you have a tendency to overspend? Keeping a month’s pay in your account can help prevent you from saving your money, then splurging later on something you don’t need.
When it comes to the money in your checking account, it may seem like the more — the better. However, that’s not always the case. When you keep your spending money and savings in the same account, you’re setting yourself up to overspend. You may think you have more than you do and splurge because the money is readily available.
If you’re able to put money away and know you won’t touch it, consider a certificate of deposit (CD). This option allows you to deposit money and leave it for a pre-determined amount of time while collecting an annual percentage yield (APY) that’s usually higher than the average savings account. These are available with credit unions as well.
What to Keep in Your Savings Account
If your goal is to set up and grow a long-term savings, consider opening a high-yield savings account. This will need to be separate from your checking account. It might even be a good idea to start a savings account with a different bank or credit union in Detroit. To make transfers easy, keep a small portion of your savings linked to your checking account, so if an emergency arises, you’ll have funds quickly. As for the remaining portion, make sure it’s separate from the money you use to pay your monthly bills. You don’t want to be able to transfer all of your savings money instantly, as you’ll be more inclined to use it.
Get More Financial Tips from Public Service Credit Union!
Now that you know the answer to the question, “How much cash should I keep in the bank,” the team at Public Service Credit Union can help you take the next steps. Whether you’re interested in online banking safety tips, getting your first credit card, or you have questions about how credit unions work, our knowledgeable team is here to help. Contact us today!