How Much Money Do You Keep in Your Checking Account?
My checking account usually stores the amount of money I have / need to spend within one month. But I don’t do it for any specific reason, mainly because I’m a 25-year-old writer living in New York and I’m lucky that I can save a little while still paying all my bills.
Some banks have minimum monthly or daily balances to avoid commissions (although this can usually be avoided with a direct deposit), which can affect customer behavior. And, of course, you want enough of them to avoid overdraft fees.
Financial Planner Tom Gilmore writes that monthly spending is the gold standard and gives you a little cash cushion. Someone in the office mentioned that he has a friend who claims to always keep $ 10,000 on the check (??) (I don’t know about you, but I don’t spend $ 10,000 every month). It sounds like a missed opportunity to earn interest somewhere, but I think if it gives you peace of mind, it’s important. Other people deliberately keep their balances low so that they are less likely to spend.
Assuming you are in a position where you can choose how much to leave on your check, any theories about what is correct?