Checking Account: Necessities or Spending Spree?

How Much Money Should I Keep in My Checking Account?

( – Being financially healthy isn’t just about how much money you have, but where you have it. That means diversifying in more ways than one. Those who keep all of their money in a single checking account quickly regret that choice if the account is ever compromised or they have a habit of spending whatever their checking account allows them to.

When thinking in terms of checking, consider money that is readily available, rather than anything that is put back for emergencies, general savings or even retirement. Then, apply the 50/30/20 rule.

Utilize the 50/30/20 Rule

The 50/30/20 rule suggests that you take your income and divide it so that each dollar has a specific purpose. The breakdown is as follows:

  • 50 percent goes to your rent, utilities, necessities and monthly obligations
  • 30 percent is set aside for flexible spending, like travel and entertainment
  • 20 percent goes toward meeting financial goals such as savings, retirement and paying off debt

Don’t Forget Fees

Whether it’s a bank, the gym or an interest-based membership, don’t forget to include scheduled fees in the budget. These often go overlooked because we don’t see them in physical form. Calculate the appropriate funds you’ll need to cover fees, penalties and any further incoming debits. This includes any fees your bank charges for simply having an account.

Build up a Cushion

It’s important to have some kind of cushion for emergencies, but don’t keep it in your checking account. The old adage “out of sight out of mind” has some truth to it. If you don’t have access to it, neither does anyone else… including stores that put their impulse buys right at eye level.

Your checking account is an important financial tool for handling your monthly expenses. Using it appropriately, combined with other financial tools can help you get further ahead and bring you peace of mind.

~Here’s to Your Financial Health!

Copyright 2020,


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