The general rule of thumb is to have at least one to two month's worth of living expenses in your checking account, and up to three to six months in your emergency savings fund.
The right amount to keep in a checking account is different for everybody, depending on your budget and expenses. Different people have different financial realities, but generally, you should have about one to two months worth of living expenses in your checking.
Monitor your balance throughout the month to safeguard against overdrafts or minimum balance requirements. Both can trigger fees and impact your credit score. Some transactions can be delayed. Others slip off your radar. To avoid falling short, keep one or two months of expenses in your checking to cover your regular withdrawals.
Financial experts also suggest setting aside three to six months of expenses to cover emergencies. It's wise to keep your emergency fund in a savings account, separate from your checking but still easy to access, with fast, no-fee transfers to your checking when needed.
Use your checking account to cover regular spending in your budget, following these four categories:
A checking account is a good place to start and a smart way to keep cash at hand. But to use it well, make sure you have all three of these accounts:
Grow your savings with Bright.
Once you connect your checking account to your Bright app, our AI learns about your finances, studies your spending habits and responds accordingly, week by week, based on what you can afford. Bright even adjusts automatically when your income, habits or goals change.
When you set up smart card payments with Bright, our overdraft protection is built in. Bright also provides a minimum balance limit, where Bright will pause transfers from your checking. You can adjust your balance limit whenever you like.
When you set up saving goals with Bright, our AI only moves funds when it makes sense for you, so you're saving more regularly and reaching your goals faster.
Powered by MoneyScience™, your personal Bright Plan keeps your checking, savings, credit cards and other accounts all in on place. It's step-by-step path to getting debt-free and building more wealth. It's also an easy way to manage your checking account.
If you don't have it yet, download the Bright app from the App Store or Google Play. Connect your checking in a snap, set a few goals, and let Bright get to work.
With a postgraduate degree in commerce from The University of Sydney, Pranay has his finger on the pulse of the finance industry. Breaking down complex financial concepts is his forte.