How much do you keep in checking?

[swanson719]

How do you determine how much to keep in checking? Is it a portion of your bills, your monthly income, etc? This is often an issue between DW and I. I'm a big fan of the $0 based budget - everything in, everything out. So I keep only a few hundred in checking to cover an emergency before we could crack into savings or our EF, which we're working on growing up to 9 months of expenses by the end of the year.

We used to keep around $1000 in checking, but it always seemed to get spent on stuff we didn't need. DW wants to start keeping $1000 in checking again as a buffer against using savings at all, but I'm afraid we'll get back into old habits of impulse buys, which kills our budget. Am I being unreasonable in this? Solutions to offer a middle ground?

[Slandgie]

I wish I had your problem Swenson! I keep my checkbook updated via Excel. Do people still use a physical paper ledger?!?! LOL

I work two jobs and I have all my deposits (some are fixed amounts, some are variable) forecasted out for the next 6 months. I am with you, I keep to the $0 based budget. It's too easy to whip out the debit card for an impulse purchase when you keep too much in your checking. Keeping it in savings makes it a little less easier to get to.

[MonkeyMama]

$0.

I think it just depends on what works best for you. I work best with "pay myself first." I keep in checking whatever I need to pay bills, and transfer the rest to savings, IMMEDIATELY. It just works best for me. If I have an extra $1k sitting in my checkbook, it's easy to sluff off and make an extra purchase, etc. I am more disciplined when I know I only have x amount to spend. For me, I just save more this way.

On the flip side, I rarely actually have $0 in my checkbook. I just keep money in there to pay all the regular bills. There is a fair amount of float. My dh was just nagging me the other day why I had $3k in there or something. Anything that is going to be spent within the month, I don't bother chasing higher interest rates on. He didn't quite understand that those bills were "in process" or maybe due next week. I don't literally keep $0 in my checking, though it will get pretty close to $0 by the end of each month. My electronic check register, for many months out, will always show a $0 balance at the end, yes. But usually things take a few days to clear, so I always have a decent checking balance. I also don't pay anything, anywhere near payday. I just set all my online bills to pay a couple of weeks after payday. No stress there. I think it's easy because I keep an electronic check register. It's just easier to balance and keep track. I never kept a $0 balance when I kept a check register by hand. Then I'd need more buffer for errors!

[wincrasher]

I keep multiple checking accounts for different purposes.

Got $28k in one, $17k in another and $2k in a third. They bear minisule interest, but what doesn't these days?

Back in the day, my mom had a checking account that had a required minimum of $1500. In her check ledger, she started with $0 (representing the $1,500. Any money above that would register above $0. So if she had $1800 in her account, her register would say $300. I always liked that system.

[disneysteve]

Well I won't be any help .

I usually keep about $5,000 in checking and often more depending on when in the month you check. Of course, the dollar amount will vary widely from person to person depending on your monthly budget. If you consider that our mortgage payment is almost $1,600 (with extra principal payment), our CC bill is typically around $3,500, utilities, life and disability insurance, Roth contributions, 529 contributions, taxable investments and numerous other things, most of which are on auto-pay, there needs to be a pretty good cushion in there to keep the cash flow going and to avoid coming up short. I can't be bothered having to transfer money in from another account every time I have a bill to pay and with all the things that get paid automatically, there is too much risk of not having the right amount in there at the right time if I didn't keep a good balance.

[ktmarvels]

I'm similar to DS. At the end of every month I drain the account to 3K. However, it's not unusual for it to be 1500 after mortgage and other things were taken out and before the mid-month pay hits.

I think this big of a gap developed when DH and I were living apart and through his deployment. That big of a buffer allowed him to pay bills and take out money when he needed and I could still pay our bills.

[feh]

It varies. Probably around $3000 at the start of the month, which gets whittled down to $500-1000 by the end of the month. I try to keep a minimum of $500 in it for unexpected check writing (which really never happens; I'm just being careful).

[Caoineag]

It varies. It can range from a couple hundred to 4k. I really don't like seeing it below 1k. Like DS I want enough in there that I don't have to worry about when I get paid to pay my bills.

[creditcardfree]

I work with a zero based budget. Any money that doesn't have a home or a plan gets put in our second checking account which we call a 'slush' fund. Right now it has an extra $1K in it, but often it is only $500. If our first checking gets to $0, then technically we have gone over budget and must talk about using the 'slush' fund. I don't worry about bouncing a check because I check and balance the account daily and we have overdraft protection that would pull money from the second checking account if needed.

[PrincessPerky]

I keep an 'invisible buffer' in both checking accounts. that way I can't spend it but also if a paycheck is late I can pay my bills with no scrambling.

I like even numbers like 1K, east to automatically subtract from the balance before looking at spendable income.

[Broken Arrow]

Well, I basically try to keep a net balance of $0. By that, I mean I usually keep only my budgeted amount in there. That way, by the end of the budget period, most of it should be used up.

Conceptually, I also agree to keep an additional padding of buffer money in there, to make sure I don't ever over-draft. In practice though, because I budget high, I tend to have a little bit left over from each budget period, and that leftover tends to accumulate and build over time until I don't really have to worry about this issue.

[kork13]

I normally have between $1k-$2k, but it regularly goes above that -- basically after most paydays. If it goes below $1k, I start to watch my balance more carefully. If it breaks $500, I'm probably already in the process of transferring some cash from savings. I've had it go down to $2 on occasion, and even negative a couple times (thank heaven for free overdraft protection). But I hate the possibility of it getting that low, so I try to keep it no lower than $1k.

We used to keep around $1000 in checking, but it always seemed to get spent on stuff we didn't need. DW wants to start keeping $1000 in checking again as a buffer against using savings at all, but I'm afraid we'll get back into old habits of impulse buys, which kills our budget. Am I being unreasonable in this? Solutions to offer a middle ground?

No offense intended, but I don't really get this... Do you base your spending on what your account balance is? I spend what I need to and what I know I can afford. My checking balance is so dynamic that I never even consider my account balance when I buy something, because I know that I'm not buying anything that I don't need (or if it's a want, it's not one that I can't afford).

I don't really know what a "middle ground" might be... there's not much middle ground between the two "extremes" of keeping nothing in checking and keeping something in checking. But excepting that, I would recommend at least keeping a few hundred dollars in checking so you don't have to constantly dip into savings if you spend more than exactly what you planned for -- since when does life go as planned?

[Ima saver]

I keep about $15,000 in my checking. I have running totats for once or twice yearly bills like property tax, house insurances, car insurances (we have six), car tags, christmas, medical, new car fund, etc. I get paid interest on this account.

[Ima saver]

I also don't write checks for anything other than current bills. If I want to buy something, I either pay cash or I charge it and pay with my budgeted charge card money.

[ceejay74]

I keep a $20-based budget, where I calculate three months ahead and the bottom line must equal $20. We generally have a couple thousand in there for upcoming bills, but sometimes it gets lower. But I guess we're pretty far ahead on our bills so when a paycheck comes in, it doesn't all go at once, even though there is a planned use for every penny.

I have line items that might not get used all at once, such as a groceries line item and a medical-expenses one. The medical one typically doesn't get used up, so every month that line item grows as I add the next month's allocated money to it. Does that make sense? So we currently have about $1000 accumulated for medical expenses, and with a new year of flex-spending money available through my job, I don't foresee us using much of it, so the $200 per month I allocate to medical expenses will likely just keep accumulating.

It's one (unintentional) way of keeping a buffer in the checking account without actually thinking of it as spendable money.