The answer depends on your spending habits as well as financial goals.

It's a regular part of your financial bookkeeping—balancing your checkbook to keep tabs on your checking account balance as well as actively refreshing your bank apps to monitor your high-yield savings account. These days, practicing smart money-saving tips not only offers peace of mind for the future but is also an act of financial responsibility. However, do you where you should be saving your dollars? More specifically, do you know how much you should keep in your checking account versus your savings account?

According to our fiscal expert, Poulomi Damany, general manager, Credit Karma, deciding on how to divvy up your money into the right account depends on a few personal factors: your daily spending and regular expenses, which affect your checking account, and your longterm financial goals, which affect your savings account. Damany explains that finding the ideal balance takes planning and a bit of practice. "Not only should you be looking at things like everyday expenses and recurring bills to know how much you'll need on hand in a checking account," she says, "but you should also know what the minimum balance requirements your account has, if any, to make sure you aren't penalized with unwanted fees."

This is why it's a good rule of thumb to aim for about one to two months' worth of living expenses in checking, plus a 30 percent buffer, as well as another three to six months' worth in savings. Additionally, here's what you should keep in mind.

woman banking using atm
Credit: RgStudio / Getty Images

Checking Account Balance

There is a misconception that having a large balance in your checking is a good idea, but according to Damany, you can be missing out on additional saving opportunities. In other words, you want your money to work for you. "Many checking accounts don't earn interest," she says, "and even those that do generally earn less interest than other types of financial products, like high-interest savings accounts."

Creating a monthly budget for your everyday expenses (utilities, gas, rent, groceries, and so on) can in return calculate a good dollar amount to keep in your checking account. "Checking accounts offer you a convenient and secure way to pay bills, make deposits or payments, and transfer money," says Damany.

Savings Account Balance

Your savings account is where your money can earn interest over time. "Many people use savings accounts to help them build wealth or save for a specific goal, like an emergency fund," says Damany. "So, if you're looking to store money away for a specific purpose (like an emergency fund, or you're saving for something like a new home or new car). Potentially, have it earn interest over time and you may consider putting your money in a high-interest savings account." Savers keep in mind that interest rates vary depending on interest rates set by the Federal Reserve.


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