Savings and checking accounts are important tools for your financial wellbeing. Your money doesn’t belong in your mattress, freezer or buried in your backyard. But how much money you should keep in your saving and checking accounts?
How Much Should Be in Your Checking Account
Checking accounts are known for having low-interest rates, so your goal with a checking account should be a place to store your money, not earn interest. It would be better if you kept enough in your checking to be able to pay your bills each month and have a little extra to access when you need cash and to avoid potential overdrafts. The rest of your money then should be in your savings account.
Thieves use skimmers on ATMs to steal information off debit cards to hack your account. Be wary of using your debit cards. But, if you are really committed to your debit card, or that’s all you can get your hands on, keep the smallest amount acceptable for your spending habits in your checking account. A criminal can make withdrawals from an account as soon as they get access to your information. Minimize potential damage by keeping most of your liquid assets in your savings account.
Protect Your Money in Your Checking Account
If you are set on using your checking account, we have some ideas that may help you.
- Use your credit card for most of your purchases. This is because credit cards come with fraud protection and they do not allow full access to your funds.
- Only use bank ATMs and cover your hand when you punch in your pin.
- Set up text alerts for your account balances and transactions.
How Much Should Be in Your Savings Account
Savings accounts, much like checking, do not have high-interest rates. If you are saving for a down payment on a home, you will want to keep your money in a savings account. If you are looking for an account to put your retirement money, consider an IRA or 401(k). Savings Accounts are meant to hold your money for your expensive short-term goals, like buying a house or a car. Another great reason to have a savings account is for your emergency fund. You should try to have six to nine months of money in your emergency fund to help you if anything unexpected happens.
Other Places to Store Your Money
Like we mentioned above if you are looking to store money for your retirement fund consider an IRA or 401(k). After you’ve saved for your emergency fund, you can start putting your money into investments. Connect with a financial advisor before you do so and assess your risk tolerance.
If you are looking to achieve your financial goals, visit DEXSTA. Please contact us online, by phone, or stop into one of our branches — we are happy to answer all of your financial questions.