How much do you having as a 'cash buffer'?

[TheKayla]

Hey everyone, I've just recently begun building up some more liquid funds, and was wondering how much you keep in your checking as a 'cash buffer' at any given time. I'm currently hovering around $2300, but have student loans, rent, and a car payment totaling roughly as my expenses each month in these categories. My current cash buffer is approximately a little bit more than how much I spend on these three items, but including the extra I pay towards my loans as well (not just minimum payments).

I also have just over $1k sitting in a savings account directly attached to my checking (dubbed small e-fund), $535 in stocks, and am set on building them as quickly as possible while still aggressively attacking my student loan debt too. Trying to juggle so much at once!

How much do you guys have sitting in your checking (or in cash I suppose) for just a cash buffer? I'm assuming I should continue to build this along side my e-fund, and debt reduction, but when do you think I should stop growing a cash buffer in my checking and keep it there, focusing primarily on my debts?

[phantom]

I like my checking account to have $300-900 at the low point for the month. I move $500 into or out of savings accounts if it starts to creep outside that range. I've yet to run into a situation where I needed cash so quickly that I did not have time to pull it out of a savings account. But, I like to have a small buffer just in case such a situation comes up or in case I forget about some planned payment that needs to come out of my checking account. It's nice to have enough of a buffer to know that I can safely withdraw cash from an ATM at any time without checks bouncing.

I'd suggest figuring out what size buffer you're comfortable with and keeping your buffer close to that amount. Anything above and beyond that can be put towards another purpose, like growing your emergency fund or paying down your loans.

[annibe11e]

The least I can handle for a checking balance is $200. I have my balance prejected out three months on a spreadsheet, so any time I'm going to spend money, I can make sure I won't have a future balance below $200 because of it.

[bjl584]

I only keep a few hundred dollars as a surplus. My checking and savings are linked, so I can easily transfer funds between the two. I can do it right on my smart phone, so I don't see the need to keep a whole lot in my checking. Especially since my savings account has a better interest rate and I have instant access to the money if I need it.

[MonkeyMama]

That is a very individual question - it really depends on your circumstances.

I run an electronic check register which eliminates all errors (maybe had more transposing or math errors when I did by pen and paper). & we tend to put most things on credit card, so I am pretty comfortable with a $0 checking balance. {It's rarely literally $0, due to float}. I get very few surprise bills; mostly plan well ahead.

I keep about $1,000 in a savings account I can access immediately. Prudent as a homeowner, but more than I have ever actually had any use for. Our other cash can be accessed in 1 or 2 business days.

What is more useful is just creating some float by paying most our bills a couple of weeks early. If I suddenly need $1,000 cash, I can just pay the mortgage closer to its due date instead. I don't think checking accounts have much real and true float in this day and age, but we create that kind of flexibility by making payments early.

[disneysteve]

I always have a couple thousand extra in my account. There is a minimum balance for free checking. I think that is $1,500 so that's part of it. I also don't want to have to shuffle money around if expenses are particularly high one month (or income is lower). I value simplicity even if it means not getting 0.5% interest on a couple thousand dollars.

[BMEPhDinCO]

We keep $100 in the bill paying checking account, no extra in the "monthly" checking account. Both of these, however, are tied to a savings account with $1k in it - free (up to 6) transfers instantly so no overdraft. THEN, the savings account is tied to my very high limit credit card - which transfers $100 at a minimum up to the needed amount for whatever the cash cost is.

I also have the accounts linked to another online savings account that makes more interest and has the emergency fund.

I don't see a reason to keep more than that around, but if you are cautious, then I'd say 1 month of expenses in the account the expenses come out of is a reasonable compromise. Then build up an emergency fund of another 3-6 months.... loan payment comes around this time as well, divide funds as needed.

[TheKayla]

Thanks for the input everyone. This makes me feel a lot more secure about what I currently have. I think I'm going to build it by a few more hundred dollars, to include all my loan payments plus any other irregular expenses here and there. For example I just had to renew my auto insurance for $600, and it may very well have been the first time I never freaked out because I didn't have to specifically budget for it. I've just been putting any additional freelance income in my account, and a few hundred here or there, so I didn't necessarily have to remember or think about it ahead of time, but still had the cash without dipping into my e-fund. The added security was much better feeling than having $600 less balance on my massive student loans!

I know that I have a minimum number of times I can borrow from my savings per month without there being a fee, so I'd like to rely mostly on checking for things that I know are coming. I'll get it up to say a max of $3000, and then continue to attack the awful student loan debt for any extra income that comes my way!

I know for sure I feel a lot more secure, and to me that's a much greater feeling than skimming such a small amount of time off my loan repayment. It's nice to have balance.

[KTP]

Way more than I should, but nothing is paying more than 1% or 2% so meh.

Cash is king, so they say.

[asdf]

$2k-$3k is my general buffer as well, so I think you're certainly on a reasonable path.

[kork13]

I normally keep about $1k in my checking at all times as my buffer, plus another $500 in a linked overdraft-protection savings account. I will sometimes dip below that $1k, but normally it's only for a few days until my next paycheck comes in. With the exception of my mortgage & tithing, there is very rarely any check, debit, or individual expense that is larger than $500, so keeping the $1k gives me confidence that my buffer will cover just about anything that suddenly pops up unexpectedly.

[autoxer]

I choose my banks premium checking account which requires a minimum balance of $2,500 to avoid fees, but they also reimburse all the other banks ATM fees, so I never have to worry about which ATM to use. I still try to keep it $1k higher, because it would be costly to drop below the minimum.

[feh]

I try to keep our checking account balance over $500.

[KTP]

After reading some of the responses from people on here I respect, I am feeling a bit silly for keeping so much in checking. Interest rates are just so low and I put everything on our 2% cash back credit card and pay it off in full each month (sometimes transferring pretty large amounts to the credit card from checking). I even pay our utility bills, car insurance, medical bills, car tags on the credit card.

What level of cash do you consider it to be worth the time to look for a better rate?

1% on $10,000 is only $8 a month...

[feh]

After reading some of the responses from people on here I respect, I am feeling a bit silly for keeping so much in checking. Interest rates are just so low and I put everything on our 2% cash back credit card and pay it off in full each month (sometimes transferring pretty large amounts to the credit card from checking). I even pay our utility bills, car insurance, medical bills, car tags on the credit card.

What level of cash do you consider it to be worth the time to look for a better rate?

1% on $10,000 is only $8 a month...

I keep as little in checking as reasonable because the interest rate stinks. I use Ally for our EF/big purchase fund.