How Much Money Should You Keep in Checking?

Have your money, now, or have more money with your money. Or both?

Written by Erin Lowell  |  on


You probably have a checking account and maybe a savings account, too. But do you know how much to keep in each?

The Answer Is in Your Budget

Let’s say this is your budget:

On the left-hand side of the screen, you can see that you’ve got $4,955.00—that’s $4,455 in checking and $500 in savings. But is that the best distribution of your funds? How much should you keep in checking versus savings?

The Name of the Game Is Liquidity

Consider how quickly you need (or might need) to access your cash, and let that be your guide. If you have money that can sit around for a while, it’s a good candidate for your interest-bearing savings account. If you’ll need to spend it, leave those dollars in your checking account.

Now, let’s go through the budget and select all the categories that you won’t need right away.

The budget categories that we picked include:

  • House Down Payment ($1,700)
  • Emergency Fund ($300)
  • Computer Replacement ($50)
  • Vacation ($500)

Those dollars are likely to sit around, waiting to do their jobs, for a while which makes them perfect candidates for your savings account.

Notice that we didn’t include ‘Auto Maintenance’. You might need that cash tomorrow, you might not. Either way, leaving it in your checking account means that it’s easy to access if you need it.

With all of those categories selected, YNAB shows me the total ($2,550) in the sidebar. That’s the amount you want in your savings account. Right now, there’s $500 in there, so you need to transfer the remaining $2,050 from checking to savings:

When you do the transfer, you don’t need to input a category into YNAB because you’re not spending any money. You’re only changing the location of the money.

With the transfer complete, YNAB shows your updated account balances:

Notice that nothing changed in the budget! The dollars are all still assigned to the same job.

More Art Than Science

Don’t overthink this one. If you’d only moved $2,000 into savings, that’d be fine, too. The point is that you can get a quick read on how much to stash in savings with just a few clicks. You might as well let your money earn a little interest while it’s waiting to do its job, right?

For more help with budgeting, check out our free, 20-minute, online workshops. And bring your questions! Our teachers love to help.


Related Articles

Your Next Step

Budgeting is not restrictive. You won’t be spending less, you’ll be spending right. So what do you have to lose? Except all that debt and stress?